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Vol. XXVIII No. 21, February 16-28, 2019

Post-Budget extravagance

by The Editor

The recent presentation of the 2019/2020 budget for the State of Tamil Nadu drew guarded praise from many quarters. It appeared that the Government had at last woken up to the fact that its many populist schemes were being funded at the expense of increasing financial abandon and by cutting off money to essential infrastructure and welfare schemes. The budget recognised the problems facing the State and projected no new doles, which appeared to indicate that focus would be on course correction. Considering that this was in an election year, albeit for the Parliamentary seats, this appeared to be a courageous act. But subsequent decisions have belied such hopes.

Hardly had the dust settled on the budget discussions when the State Government announced that it was going to provide cash assistance to over 60 lakh families that are below the poverty line (BPL) in the State. The quantum of assistance amounts Rs 2000 per family, which means the new dole will add Rs 1,200 Cr to the State’s expenditure. Where is this money to come from in a year when, with a view to keeping the middle classes happy, no new taxes were announced? Obviously through either increased receipts and or more borrowings. The former is unlikely to happen as we appear to have stagnated on that front. If we are to resort to the latter it just means we are once again on our profligate ways.

There is yet another angle to this. If just after a budget presentation in the legislature a State Government were to via a suo moto announcement project a major expenditure of this kind, to what purpose then is the budget itself? The number of BPL families estimated is also hugely suspect as the budget presentation had given a far lower figure. It is unlikely that a state like Tamil Nadu has so many BPL families in it. The announcement is silent on the modalities of the cash distribution. Will it be via the Public Distribution System? That was the case when just a month ago, all ration card holders in the State received Rs. 1,000 apart from gifts in kind for Pongal and also to tide over the effects of Cyclone Gaja. This time, the money is being justified on the basis of several parts of northern Tamil Nadu facing a drought. No matter whether it is flood or drought, the political class knows how to make capital out of the situation.

The Opposition is understandably quiet. Which party in an election year is likely to criticise a decision to give money to people below the poverty line? That would be tantamount to political hara-kiri. In fact die-hard political opponents have welcomed the move. They have to. What is being forgotten is that eventually, sometime in the not-so-distant future, there has to be a bitter awakening and the Government then in power will face the music, as will we, the tax-paying public.

Lastly, are such doles really helping the BPL families come out of their financial stress? Historically, such gifts actually become detrimental, only making them more dependent on assistance. Even the High Court of Madras has recently commented that the freebies have only made the people lazy. It would have been far better if the money committed so far – Rs 3,200 Crores (Rs 2,000 Crores in the first round and now Rs 1,200 Crores) – had been spent on some long term poverty alleviation programmes. But in an election year, who is bothered about such things?

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