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Tamil Nadu's expensive freebies

K. Venkataramanan Chennai

There was a time when a pre-election assurance invited a dismissive shrug or a derisive comment. Not any more. The Dravida Munnetra Kazhagam (DMK) has ushered in a new era of credibility for alluring promises, by making a fetish of keeping its word after getting elected, despite the huge financial implications.

What seemed like astounding promises in 2006 — rice at Rs.2 a kilo, free colour television sets to all households that didn't already have one, free gas stoves and cooking gas connections, and complete waiver of agricultural cooperative loans — were fulfilled, partly through revenue from liquor sales.

This has set off a competition for doling out freebies, with the main opposition All India Anna Dravida Munnetra Kazhagam (AIADMK) coming out with its own promises of gifts in kind.

The State's total revenues have been steadily going up every year, and the latest interim budget for 2011-12 pegs the figure at Rs.79,000 crore. Liquor rakes in nearly one fifth of its annual spending, with the current year's projected revenues standing at around Rs.14,000 crore.

The AIADMK has promised that 20 kg of rice meant for nearly 1.90 crore cardholders would be provided free. As the average monthly rice off-take through PDS is about three lakh tonnes, the State government's subsidy bill will go up by Rs.360 crore annually, if this promise is fulfilled.

Cost of fulfillment

These estimates are nothing in comparison to the whopping amounts that would be needed to fulfill other major promises. The DMK government, which spent Rs.3,742 crore to dish out free TV sets to nearly all households — 1.72 crore sets were readied and all but 10 lakh distributed — may have to shell out half the amount to fulfill its promise to provide a mixer or a grinder to every household. If the average cost of a grinder or mixer is taken as Rs.500, the total spend may be Rs.860 crore.

In the case of the AIADMK, the cost could be twice as much, as the main opposition party has promised both a mixer and a grinder.

Further, it may need to spend at least half that amount (Rs.860 crore) for providing a ceiling fan to every household as it may cost at least Rs.500 per unit.

The DMK government thought it had struck a chord with its ‘Kalaignar Housing Scheme,' under which it plans to convert three lakh huts into concrete houses by providing a Rs.75,000 subsidy to each unit — a total cost of Rs.2,250 crore to the exchequer every year.

The grant will be, according to the party's manifesto, raised to Rs.1 lakh, and may result in an additional expenditure of Rs.750 crore.

But the AIADMK wants to outdo the DMK by raising the subsidy to Rs.1.80 lakh for each unit. The AIADMK manifesto only refers to three lakh people below the poverty line, which may imply that the scheme will cover 75,000 families — a spend of Rs.1,350 crore. More fanciful is its promise to grant a subsidy of Rs.1 lakh to a middle class population of 40 lakh.

While no time frame is indicated, simple arithmetic suggests the total expenditure to implement this promise will touch Rs.10,000 crore! The DMK has promised laptops to all courses getting admitted to professional courses in government and government-aided colleges, and at a conservative estimate, this scheme should cover 10,000 engineering and 2,000 medical students. It is not yet clear if the nearly 17,000 seats in government polytechnic colleges, besides other professional courses such as nursing, pharmacy, law, agriculture and architecture courses, will be covered by the scheme, but it must be possible for the government to implement it without great difficulty as it may be able to get laptops for an average unit cost of Rs.5,000 when made in bulk. Even 30,000 laptops a year might be distributed at an annual cost of Rs.15 crore.

Competing promise

However, the competing promise from the AIADMK may involve a bewilderingly large amount. As it promises laptops to all higher secondary students in schools and all college students, the number of beneficiaries may be more than a couple of million.

In 2010, there were over eight lakh students in arts and science colleges, at least three lakh in professional colleges, and 12 lakh ‘plus two' students in schools in the State board schools alone. The expenditure involved in providing laptops to all of them may touch an astounding figure of over Rs.1,000 crore.

Apart from laptops, the AIADMK has also promised a financial assistance ranging between Rs.1,000 to Rs.5,000 to all students, including those in private schools, from class X to XII to arrest the dropout rates. Sixty thousand milch cows in 6,000 villages and four sheep to each family before the poverty line, three cents of land to poor families, and 20 litres of pure drinking water to each family — the list of promises is long.

The AIADMK's manifesto, however, claims that its other plans will raise revenues to the tune of Rs.1,20,000 crore in five years to finance its ambitious social sector plans.

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