A likely mix-up by RBI regarding Tamil Nadu’s data on subsidies

Reserve Bank of India. File
| Photo Credit: Indranil Mukherjee

It appears that the Reserve Bank of India (RBI) has mixed up the figures of “subsidies and transfers” regarding Tamil Nadu with those of “subsidies” for the last five years. 

In its annual publication — State Finances: A Study of Budgets of 2024-25 — the RBI (page 174, under the table (Statement 36) with the heading “subsidies”) gave the figures for 2018-19 and 2019-20, which corroborate well with those of the State government. But, from 2020-21 up to 2024-25 (budget estimates), the figures, as put out by the RBI, pertain to “subsidies and transfers” and not just “subsidies,” if one is to compare the RBI’s data with those of the State government.  

Anyone who goes through the table in question and is oblivious to the data of the Tamil Nadu government would get the impression that the State is not just the highest spender on subsidies. Also, the difference between the southern State and others is “quite wide.” For example, for the year 2022-23, the figures of subsidy, mentioned in the RBI’s publication, for Karnataka, Maharashtra, and Madhya Pradesh were ₹31,926 crore, ₹43,158.4 crore, and ₹40,305.9, respectively, whereas Tamil Nadu was said to have spent ₹1,20,475 crore.

To put it in other words, Tamil Nadu had spent about 3.7 times of what Karnataka had done; 2.8 times of Maharashtra’s; and close to three times of Madhya Pradesh’s. But, the budget document presented by the Tamil Nadu government to the State Assembly in early 2024 pointed out that the figure of subsidies was ₹29,559 crore only. 

The problem lies in the RBI treating the figures of “subsidies and transfers” of the Tamil Nadu government as those of “subsidies,” without pointing out what other components have been included under the heading of “subsidies.” One of the budget documents of the State government for 2024-25 clearly gives 16 components under the heading “transfers and subsidies.” The components include Grants-in-Aid, Contributions, Scholarships and Stipends, Social Security Pensions, Write-offs and Losses, Rewards, and Discount on Loans. 

As in the case of previous years, in the current year, the highest share goes to “Grants-in-Aid” with about ₹77,785 crore. To explain the meaning of “Grants-in-Aid,” the State government provides grants to the Tamil Nadu Power Distribution Corporation for the losses, apart from giving tariff subsidy. In 2023-24, the Corporation received ₹17,127.18 crore as grants, in addition to ₹14,976.42 crore as tariff subsidy. The overall figure of “Grants-in-Aid” of the State government for the previous year was around ₹84,900 crore.

No response was received from the Reserve Bank of India with regard to the query by this correspondent on the wide variations in the figures of subsidies.