TN budget likely to shift towards targeted subsidies


The Tamil Nadu budget, to be presented on August 13 by state Finance Minister P.T.R. Palanivel Thiaga Rajan, is likely to have a paradigm shift as far as subsidies are concerned.

Bringing out a white paper on state’s finances, the minister had subtly indicated that the subsidies are being enjoyed by people across economic backgrounds.

Successive governments that ruled the state, both of the AIADMK and DMK, had extended subsidies to all classes of people. These subsidies include crucial sectors like electricity, water and civil supplies and according to the government’s approach seen in the White Paper, the Finance Minister will be taking a targeted approach towards subsidies.

In the White Paper, he had noted that those who consume more electricity were receiving more subsidies, and records of the state electricity board show that there is an under-recovery of electricity bills, to the tune of Rs 18,735 crore, in financial year 2020-21.

All domestic consumers of Tamil Nadu enjoy free 100 units of bimonthly power.

The White Paper also hits out against the unmetered water supply at Chennai and said that this was an unfair and regressive system, as most of the water supply connections that are not metered are to huge houses and mansions.

While these statements in the white paper can be seen as an indication towards targeted approach towards subsidies, how the government will implement it is a million-dollar question. Many permutations and combinations will have to be taken into account before the Finance Minister embarks upon measures like targeted subsidies.

Talking to IANS, Manikantan Krishnan of Salem Study Centre, a think tank on economic and business studies, said: “The White Paper has come out with all the major problems being faced by an economist before preparing a budget but how the problems would be solved and what are the new measures to be taken. The Finance Minister will have the drive to take some bold measures but the DMK, as a political party which is banking on populist schemes, will wilt under pressure from grass roots and nothing concrete might happen except for a little reform here and there.”