‘State govt. schemes, policy measures helped mitigate inflationary pressures’

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State’s retail inflation declined from 6% in 2022-23 to 5.4% in 2023-24 and further to 4.8% in 2024-25 (as of January 2025), as per the Economic Survey of Tamil Nadu 2024-25.

The State government has taken several measures to mitigate the effects of inflation, especially for the poor, according to the survey.

While Tamil Nadu’s average inflation of 5.7% was higher than India’s inflation of 4.85% from 2019-20 to 2023-24, the trend reversed since 2020-21, with the State’s retail inflation dropping significantly. Notably, in 2023-24, the State recorded the 8th lowest retail inflation among 20 major Indian States, it said.

Urban inflation in Tamil Nadu decreased from 6% in 2019-20 to 4.5% in 2024-25 (as of January 2025), while rural inflation remained at 5.4%. Thus, the latter drives the overall inflation in the State. Among various groups, food and miscellaneous items contribute significantly to rural inflation, the survey said.

Notably in the last three years, average inflation of both rural and urban Tamil Nadu was lower than that of India, it said.

The weightage of labour-intensive services is higher in Tamil Nadu’s consumer price index basket, when compared to the all-India basket and those of other peer States. Labour costs have a much higher potential to impact the State’s inflation trajectory. Tamil Nadu is one of those States where labour costs are relatively high, the survey said.

Policy measures implemented by the Tamil Nadu government, such as subsidised electricity and transportation, which help drive down input costs, deserve special attention, for they potentially help soften inflationary pressures, it said.

The Universal Public Distribution System, which provides food commodities at subsidised prices, ensures that the population is largely insulated from food inflation. A robust public transport system, which continues to be strengthened with initiatives such as Magalir Vidiyal Payanam Thittam, helps absorb rising inflation and protect vulnerable groups, it said.

Rural inflationary pressures are also addressed through the Mahatma Gandhi National Rural Employment Guarantee Scheme, despite the slowdown in allocations by the Union government, it noted. Apart from day-to-day inflation, health-related expenses, which significantly impact family finances, is managed by a well-functioning public health system, capped by the Chief Minister’s Comprehensive Health Insurance Scheme, the survey said.

The Kalaignar Magalir Urimai Thittam is a landmark initiative that acts as a form of social insurance and a step towards universal basic income, providing assured income to women heads of households to mitigate expenditure needs, it added.