Promised freebies to take up 25pc of budget, experts question feasibility

Experts have questioned the feasibility of such proposals at a time when the State revenue has been severely hit post the pandemic and the High Court pulling up the ECI to verify the feasibility of such promises before elections. While loan waivers and free home appliances and gadgets have been promised in the past, both DMK and AIADMK promising a monthly income of Rs 1,000 and Rs 1,500 for all ration card-holding women besides six free LPG cylinders by the latter has caught attention of economists who claim this scheme alone could cost the state Rs 40,000 to Rs 45,000 crore annually. “The State would incur an annual revenue expenditure of about 15-16% of the total budget expenditure for this scheme alone,” said KR Shanmugam, director of Madras School of Economics.

Already, freebies account for almost 10% of the total revenue expenditure but they are one-time. “If you combine the existing freebies with the monthly payment, the overall expenditure would go up to 25% of the total budgetary expenditure of around Rs 2.6 lakh crore,” he added.

Professor Bernard D’Sami, senior fellow, Loyola Institute of Social Science Training and Research said that the two Dravidian parties have gone too far. “They are clever once they come to power, will come out with criteria for availing benefits to limit the number of beneficiaries, ” he said.

However, Professor Venkatesh Athreya, economist, pointed out that the largest “freebies” go to the corporate sector and the super rich such as abolition of wealth tax, frequent reduction in corporate income tax rates, new incentives including implicit subsidies on the inputs and services on and so on. “The justification, never proven so far, is that these stimulate investment and expand employment,” he tweeted.