A surprising budget in Tamil Nadu


A tweet by Tamil playwright and public intellectual Indira Parthasarathy about the Tamil Nadu budget and the way it went viral largely symbolizes the public perception of the budget. Professor Parthasarathy, who is not known for making frequent comments on political events, called the budget “nuanced, broad-based and people-centric”. But what was more surprising to critics and supporters of the ruling DMK alike was the budget itself, the regime’s first budget for a full fiscal year (2022-23).

Backers were surprised there wasn’t a dramatic giveaway announcement. There was no word on restoring the old government employee pension scheme promised by the ruling party in the 2021 general election. Critics were surprised that DMK, which returned to power in 2006 with promises of free distribution of color televisions and cooking gas stoves, showed a propensity to streamline subsidy distribution.

The budget sends a clear signal that the government is aware of the challenges ahead. The impact of the Russia-Ukraine war, the expected increase in inflation and interest rates, the COVID-19 pandemic, the uncertainty about the continuation of the compensation of the states for the implementation of the GST and the probability of monetary losses and the assumption of entire losses of the permanently deficit energy supplier, the Tamil Nadu Generation and Distribution Corporation, from 2022-23 all find a mention in the budget. Taking these factors into account, the government conservatively estimates next year growth of just 17% in terms of state-owned tax revenue (SOTR), which accounts for 60% of its total revenue. However, a growth rate of almost 25% is forecast for 2023-24. Interestingly, the SOTR growth rate has only exceeded the 20% mark twice since 2006.

However, given what it has ‘achieved’ this year, the government is optimistic about progress on the budget front two years from now. As Finance Minister Palanivel Thiaga Rajan noted in his budget speech, this year “there will be a reduction of over £7,000 crore in the absolute size of the revenue deficit [vis-à-vis the previous year, a COVID-19 year], reversing an alarming trend of rising deficits every year” since 2013-14. The government is optimistic about realizing significant cost savings through measures such as the data cleanliness project, which is expected to exclude ineligible individuals from the scope of welfare systems.

This year’s budget is notable for several reasons. It seeks to convert the existing marriage assistance scheme into a program to encourage higher education for girls, paying £1,000 a month directly into their bank accounts provided they have studied from grades 6 to 12 in government schools and have completed undergraduate, graduate and and attended ITI courses. The candidate will receive the support uninterrupted until the completion of her courses. The government is placing increasing emphasis on ensuring that its welfare systems only reach genuine beneficiaries. With this DMK regime, a rethinking of the party in the direction of subsidies should be marked, since the universal application of subsidies has always been the reputation of the DMK and also the AIADMK.

In order to give the construction industry a much-needed boost, the government has decided to raise the existing floor area index in areas bordering the routes of subways, suburban trains, federal highways and ring roads. Landowners have also called for similar action along the East Coast Road. It remains to be seen how long the DMK regime will be able to maintain its position on budget consolidation without compromising the welfare concept.

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