Poll promises of TN parties may cost state Rs 30,000 crore a year

Implementing the poll promises of TN parties will cost state exchequer Rs 30,000 cr a year, say experts.

Graphic by Reuben N Verghese.

The ruling All India Anna Dravida Munnetra Kazhagam or AIADMK, and all the major parties contesting the assembly elections, have said they will prohibit liquor sales, which now contributes Rs 27,000 crore a year to the state’s revenue. This apart, the AIADMK has promised voters free mobile phones, laptops and internet; a 50 per cent subsidy for women buying two-wheelers; and 100 free units of electricity for every house. 

The opposition Dravida Munnetra Kazhagam has also promised smart phones to the poor and free laptops and 3G/4G connectivity for 1.6 million students. These are among the DMK’s several populist promises targeting farmers, women, fishermen, and the youth. The freebies, subsidies and loan waivers promised by each of the parties would amount of Rs 20,000-30,000 crore a year, said M R Venkatesh, a chartered accountant. Freebies alone would cost about Rs 10,000 crore, he added.

If one million women opt for the subsidised moped/scooter in a year it would mean a Rs 2,000 crore subsidy, he said. The manifesto says beneficiaries will be working women. The government would first have to define working women, said an economist.

The decision to provide 100 free units of electricity will cost Rs 2,200 crore a year. The state’s power distribution company is ailing and receives a subsidy of Rs 2,560 crore from the government, according to a report.

Chief Minister J Jayalalithaa announced in January the government would provide a Pongal package, including Rs 100 each to 19.1 million ration card-holders. In its manifesto, the AIADMK has offered a Pongal gift coupon of Rs 500 per ration card.

It is not easy to assess the impact of the DMK’s promise of smart phones, considering its manifesto says these will be offered to the poor. 

Existing freebies like free fans, mixies, uniforms, cycles and laptops would have cost the state government around Rs 15,000 crore every year, said R Srinivasan, associate professor, department of econometrics, University of Madras.

The state government spends around Rs 50,000 crore a year on subsidies, says Venkatesh. Tamil Nadu’s outstanding debt was Rs 2.1 lakh crore in 2015-16.