Every Budget season in Tamil Nadu produces the same refrain: the State needs more money, the Centre owes the State more, and taxpayers must prepare for new levies. The first Budget of the Tamilaga Vettri Kazhagam (TVK) begins with a different question: before asking citizens for another rupee, has the State collected every rupee legally due to it — and spent what it has as well as it should?

The data, the facts

Tamil Nadu’s fiscal position is genuinely difficult. Debt is high, the revenue account remains in deficit, and salaries, pensions, welfare and interest payments leave limited room to manoeuvre. None of that is in dispute. What is in dispute is whether the response should begin with new taxation, or with making the State’s existing revenue collection and expenditure substantially more efficient.

The Comptroller and Auditor General of India’s (CAG) own numbers make the case. In 2023-24, Tamil Nadu budgeted about ₹4.47 lakh crore and spent roughly ₹4.14 lakh crore — a net underspend of ₹33,302.53 crore. Separately, ₹1,078 crore in supplementary provisions across 81 cases in 26 grants was found to be unnecessary because the original allocations had not even been exhausted.

The same audit records that 2.89% of revenue expenditure and 6.14% of revenue receipts had not been reconciled with the Accountant General’s own records. None of this is proof of corruption. It is evidence that budgeting and accounting systems can be considerably more disciplined.

This is the argument for zero-based budgeting: an allocation should not continue automatically because it appeared in last year’s Budget; it should justify its continuation and its amount. This writer has seen the idea take shape first-hand in the United States, where Jimmy Carter used zero-based budgeting as Governor of Georgia and later introduced it into the federal budget process as President. Tamil Nadu adopted the same principle on paper in 1988, the very year Carter’s own experiment had long since faded from Washington. It never became the governing discipline of the Budget here. Paired with performance-based budgeting — not how many crores were released for road works, but how many kilometres were built, at what cost, and to what standard — it stops to be an accounting exercise and becomes a management tool.

Data-driven governance standards

Numbers discipline government only when they are measurable and comparable. As a starting point, the TVK government should work toward department-wise performance data alongside comparable figures from other States and, where available, the Union government — cost per kilometre of road, cost per household connected to piped water, administrative cost per welfare rupee delivered. It can begin where data is most readily available and expand as systems improve, rather than promise a complete comparison on day one.

There is already a live example of what competition does to cost. When the Greater Chennai Corporation opened smaller road-restoration contracts to wider bidding, a ₹25 lakh Ambattur project drew nine contractors and closed 25.9% below the official estimate. That is not proof that the whole system was previously running 25% over cost — a lower bid still has to deliver the same specifications, and one tender cycle is not a trend. But it is a working demonstration that transparent competition can create real fiscal value without a single new tax.

The same logic applies to revenue. A separate CAG audit flagged ₹1,538.18 crore in irregularities across 337 Goods and Services Tax (GST) cases, of which only ₹8.64 crore had been recovered at the time of audit, alongside 244 taxpayers operating outside the GST net altogether.

These are audit findings requiring verification and due process, not revenue the government can book today. But they point to an obvious principle: before raising rates on people who are already paying honestly, exhaust the scope for improving compliance and collection efficiency. This is the brief given to the Montek Singh Ahluwalia-led Revenue Augmentation Committee — not simply to look for new taxes, but to close compliance gaps, rationalise exemptions, and identify revenue that the State is currently failing to collect.

Spending to outcomes

The same discipline has to apply on the spending side. The government has announced a high-level Expenditure Reforms Committee to review schemes for their impact and ensure that resources reach intended beneficiaries without restricting genuine welfare expansion. This is where performance-based budgeting becomes critical. The question is not merely how much was allocated or spent, but what that expenditure produced: how many kilometres of road were built, how many households received reliable drinking water, how many students gained measurable educational outcomes, and how many beneficiaries actually received the intended support.

This is not an argument for less welfare. It is an argument for welfare that can be measured.

Fix the leaks first. Spend against outcomes, not habit. Then decide what, if anything, still needs to be asked of the taxpayer. That is the standard that the TVK will hold this Budget to — and the standard it intends to hold itself to.

Americai V. Narayanan is National Spokesperson of the Tamilaga Vettri Kazhagam (TVK), a certified public accountant (CPA) and a certified management accountant (CMA) with an MBA (all from the U.S.)

Published - August 20, 2026 12:08 am IST