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Revised Tamil Nadu Budget for 2021-2022: Self-Inflicted Contradictions without Vision for Clean Governance

The regional economic performances would be taken a serious note on account of the COVID pandemic in India for a meaningful recovery. This is so subtly true not just the handling of general public health crisis erupted due to COVID pandemic at regional levels but overall scheme of pandemic management concerning political economy, society and the lockdowns imposed by the governments. The annals of the pandemic would be better understood after several years of efforts with the right sets of data. The states like Tamil Nadu stand out as unique in their respect.

The Dravida Munnetra Kazhagam (DMK) which came to power after a gap of a decade was quick to recognize the fact that Tamil Nadu is not all that bad in every aspect in the spheres of economic, environmental, and social development. But the same DMK had whined on every single issue during the last decade, just because it has been out of power. Therefore, it is interesting to note the steps being taken by the DMK government; it would be closely watched by every quarter whether steps taken by the government would be different from the previous government because this government like others comes with huge baggage.

Two recent documents of the DMK government expose: what it promised as pre-poll agenda, what it intends to do on the ground irrespective of the strengths and weakness of the State of the economy, and where the Tamil Nadu economy stands out in the national economic perspective as the second-largest economy in the country. The first one is the “White Paper on the State of Finance” and the second is the Revised Budget for the current Financial Year 2021-2022.  

Each one warrants complete scrutiny not just because it’s the DMK government’s documents but because it would be very imperative to take forward the issues in the right perspective for a better future. Though the DMK government has to be congratulated for boldly bringing out the White Paper on Tamil Nadu Government’s Finances with facts and figures, the public debates at large forget about what it has omitted. It has done this despite very well knowing its conflicting facts and figures mentioned in the past as well as the in the last three months after assuming office. It would be good to have a white paper on all major sectors so that the present status would be better informed for public discourse if not for taking corrective mechanisms to overcome.        

This article briefly looks at the revised budget for 2021-22 which was presented on 13.08.2021 more than two months after the DMK took over office. The budget was presented by the Finance Minister Dr. Palanivel Thiaga Rajan, maybe for the first time by someone, who is a not seasoned politician. His wide outspoken tone on various subject matters did not match with the budget announcements. Looking at the sectoral issues and challenges faced by the Tamil Nadu economy, the budget hardly recognizes the urgency and disparity faced by several of them before taking steps to revive.

The budget’s announcement in key sectors like health, education, road, transports, power, water resources, police, judicial, public distribution, etc. needs substantial rethinking with new ideas for better governance to fix the prevailing challenges which are no less than lingering for years now. It is the typical budget of DMK with a few tweaks here and there.

However, it is so sobering to note that in the tenth paragraph of the budget speech, the finance minister mentions that “The White Paper, released on 9th August 2021… has laid bare the dismal record of fiscal mismanagement of the past decade, including the elevated deficits and consequent debt overhang from the previous Government.” The white paper has to be analysed separately in the right perspective keeping in mind the track records of the political economy of the state because the white paper misses many important aspects.  

While the DMK government after assuming office in May, 2021 had issued “securities in the form of Stock” for availing loans of more than Rs.15,000/- crores for providing freebees which were promised in their election manifesto. Moreover, the present DMK government has announced free city bus rides for women which amount loss of more than Rs.1200/- crores annually. This has been done by knowing the fact that the Tamil Nadu state transport corporations are already overburdened with losses of over Rs.33,000 crores. 

Further, the government has announced “waiver of co-operative jewel loans and loans to Self Help Groups” which together amounts to Rs.7,559.95 crores. If the DMK is seriously concerned about the “debt overhang” of the state they should not have sanctioned the above loans which will be paid back after twenty years or thirty years period by which time God knows who will be in power. This is a classic case of self-contradiction of the present DMK government which pretends to set right the systemic imbalances of state finances over the next few years. 

The finance minister has announced that the government would work towards the “Data-Centric Governance” which is near impossible to think about, keeping in mind the performance of past DMK governments because the ground realities have not changed anything by virtues of its foregone conclusions; because if any cleaning has to take place in the overall governance it has to start from its party governance and its cadre.  Nevertheless, it is worth noting the following announcements made in the budget:

  • An advisory council to develop a Federal Fiscal Model with renowned experts on legislation involving revenue and taxation 
  • A cross-departmental initiative to link all available Government data sources 
  • Landbank of all state government lands for better utility and monetization 
  • E-procurement will be mandatorily adopted across all procuring entities 
  • Smart metering for all public utilities 

This slew of data-centric governance reforms announcement made in the budget for the governance of government affairs makes huge sense from citizens perspective but will that happen ever in near future is the single most billion-dollar question because the data-centric governance of government machinery means bringing responsibility and accountability for government employees for actions and inactions with timelines. 

Though the intentions are good, outcomes may have to be judged objectively with actual results and performance at the end of the year which seem to be gloom given the indications of the overall performance of the government track records. History teaches us better that the Dravidian parties are good in taking credit for intentions and burying the outcomes even after decades!

Tamil Nadu is the most urbanized state in the country, the budget did not give any thrusts to make cities better place to live and work with a sense of pride accessing basic infrastructure facilities which are something the budget got completely wrong. It was announced in the budget that “Sewage disposal systems including underground sewerage systems will be provided to fully cover the urban population. 27 cities with a population of above one lakh will be fully covered with underground sewerage systems. The maintenance of the sewage systems will be fully mechanized.” It is well known that the underground sewerage systems were not efficient and had failed in many cities; some cities are finding their way to a decentralized model of wastewater and solid waste management which needs to be implemented vigorously. 

The budget makes the cursory announcement of the inefficient idea of online monitoring of “Sewage Treatment Plants” across the districts. Similarly, there is no new thought process in the budget for solid waste management for improving better hygiene and sanitation in cities, towns, and villages which is the need of the hour for prevention of diseases and arresting the eroding of environmental degradation.  The announcement of Singara Chennai 2.0 is without bold new vision or ideas for a sustainable model of building cities infrastructure facilities.  

The urban wage scheme announced in the budget for urban poor on a pilot basis in public assets management would be disastrous because the cities’ labour force even the poorest of the poor are quite dynamic with higher bargaining power. Anything fixing the wages of urban poor would squarely go against the wishes of the poor labourer including the unskilled labourer who has strategic bargaining power with several other factors influencing.    

The announcement of making the state’s own education policy is of no surprise given the hate differences with the present Union government. But make no mistake, indoctrination of young minds starts with education early in the state to make sustained vote bank, hatred of Hindi and Union government all in the name of the federal system, completely ignoring the devolution of administrative and financial power to local bodies like city corporations.

Tamil Nadu is a leading State in Higher Education with a Gross Enrolment Ratio (GER) of 51.4 percent compared to the national average of 27.1 percent but only 4 Government Arts and Science colleges featured in the top 100 colleges based on the National Institutional Ranking Framework (NIRF). The quality of education matters hugely for poor and first-time learners. The governance structure at every level in the education sector needs substantial changes with the blending of communication and technological tools and a level playing field. It is not making profit stupid; it is the poor quality which is the real stupid.

The announcement in the budget made for sports, differently-abled, agriculture, etc seems to sound pertinent going by its intentions. The outcomes would be measured by the improved governance of an efficient system by arresting the leakages and steadily plugging the middlemen. What we need is a decentralized governance system with a fair amount of accountability and transparency towards citizens’ aspirations. There is no such thing called Dravidian economics or Dravidian model budget, but the DMK ideology pretends that it has it. Only time will tell us the fate of the current DMK government’s announcements made in the budget. 

Image Courtesy: Deccan Herald

Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research. 

Chandrasekaran Balakrishnan
Chandrasekaran Balakrishnan
Chandrasekaran Balakrishnan is Research Fellow (Urban Eco-system and Skill Development) with CPPR. His areas of research interest are economics of education, vocational education and skills development, economic reforms, liberal vision for India, water management, regional development, and city development. Chandrasekaran has an MA in Economics (University of Madras) and an MPhil in Social Sciences (Devi Ahilya Vishwavidyalaya University, Indore).

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