The DMK-led Tamil Nadu government may get into reform mode post the local body elections likely to be held by the end of 2021, say party leaders and industry experts.
“Though a white paper on the Tamil Nadu government finances spoke about the necessity to hike tax rates and other things for those who can bear it, the state budget that was presented was a usual one. Perhaps the state government may get into reform mode after the local body elections,” K.C. Palanisamy, former AIADMK MP and MLA, told IANS.
Palanisamy said the local body elections may be held before the end of 2021 or February 2022.
Finance Minister Palanivel Thiaga Rajan after declaring ‘once in a generation reforms a must’ and ‘business as usual’ approach cannot continue while presenting the white paper on the state government’s finances, came out with a relatively populist budget.
As per the white paper, reforms/restructuring in state government undertakings, statutory boards, power utilities, mobilisation of tax revenues, mode of subsidy deliveries were on the cards.
“As a debutant Finance Minister, he might have taken a soft approach with his first budget which is an interim budget,” Palanisamy said.
Industry experts said Finance Minister Rajan’s budget is nothing but a status quo or an extension of the previous AIADMK government’s budget.
“The white paper set the expectation that the Finance Minister will provide a reform budget to reduce the state debt. One could agree that he needed more time to come up with the actual reforms but least expected was the transformation roadmap, a timeline,” Sriram Seshadri, Founder and Managing Partner, Disha Consulting and formerly Partner and Managing Director, Accenture India, told IANS.
According to him, a white paper lays down the problem, analysis, probable solution.
On the other hand, the government’s white paper laid out the problem statement which was well known and the expectations were there on reform proposals in the budget which surprisingly did not happen, Seshadri said.
“As an economist, I feel satisfied that the budget didn’t provide for any of the poll promises. For an economist the white paper gave an expectation that there would be a reform and transformation roadmap but the budget was disappointing,” he added.
According to him, nothing was there in the budget for beefing up the state revenues while the debt was increasing.
“Tamil Nadu will cross the debt of Rs six lakh crore mark by 2021 end. Only solace is during the budget discussions in the state Assembly, the Finance Minister has said some of the poll promises will not be met such as revising the old pension scheme for government employees,” Seshadri added.
He said if there is a reform agenda with the DMK government it has to be rolled out soon and not wait for the next year’s budget.
However, he agreed that the government will take some reform steps mainly targeted subsidies to poor sections of the society, refine the rules for ration cards and revenue optimisation initiatives like tax reforms.
“Already Tamil Nadu’s economy is the fourth largest in the country and will slip to fifth or sixth place soon. Hence, the state should regain the momentum, cut the red tape and enable ease of doing business both in MSME and large industries,” Seshadri said.
While the government’s popularity endures it should take some tough decisions to reduce government spending, disinvestment and make announcements to attract investment, he said.
“Sterlite Copper (copper smelter unit of Vedanta Ltd in Tuticorin) closure is one of the stumbling blocks for investors to invest in a big way because there is no guarantee to their investment. The government should enable reopening of Sterlite within the guidelines of the pollution control norms. Likewise closely monitor to optimize revenue on the natural resources, mining and sand. The government gets less than Rs 1,000 crore revenue whereas the potential is much higher,” he added.
However, the signs of change in the government are seen in the budget by not implementing its populist poll promises like Rs 1,000 per month dole to the female head of the family.
“Instead the government had decided to conduct a study to identify eligible beneficiaries. This move is new as in the past the state government used to disburse financial assistance for almost all ration card holders,” K. Puhazhendi, Director, Perfint Healthcare, told IANS.
Referring to Rajan’s statement that the governance will be data-based, Puhazhendi said the government can mine data available in its own departments/municipal corporations.
The smart ration cards are linked with Aadhar cards.
Puhazendhi said the government employees themselves form a big database so that undeserved subsidies can be stopped.
“Data on property taxpayers, land owners, vehicle registrations, power consumers, ration card holders, data about government employees, shops and business establishments, factories and other data are available with different departments,” Puhazhendi said.
The government can collate and gather from the people with help of door-to-door data gathering. This could be a starting point to build a database and target the subsidies and other government schemes, he added.
Stressing that the government’s focus should be on making each department, municipal corporations self-financing, Puhazhendi called for a freeze on government hiring and investment should be made in information technology systems to digitise the services.
It is high time the state government goes in for public-private partnership in the tourism sector. The state government owns several hotel properties which are in need of private investment and management.
(Venkatachari Jagannathan can be contacted at firstname.lastname@example.org)