The 7th Pay Commission caused a stress on the finances of Tamil Nadu. This led to a higher than projected revenue deficit in 2017-18, Finance Secretary of Tamil Nadu, K Shanmugam said.
Last year's Budget had projected a revenue deficit of ₹15,930 crore, but the revised estimate pegs the amount at ₹18,370 crore.
Addressing a post-budget press conference, he said that it was off the mark specifically due to the implementation of the pay panel's recommendations. This led to a spike in revenue deficit, he also said.
He, however, added that it was getting stabilised from the current year and would go down in the future since the revenues are expected to grow at 14 per cent. He also said that normal growth of salary expenditure is expected at 8 to 9 per cent.
Despite a burden on account of the implementation of the new pay hikes are estimated at Rs 14,719 crore a year. The Budget has projected the fiscal deficit to GDP ratio at 2.79 per cent for 2018-19, which will be below three per cent fiscal norm. This is after projecting a revenue deficit of Rs 17,491 crore and a fiscal deficit of Rs 44,481 crore for 2018-2019.