Money every month to every household: AIADMK, DMK explain plan of action

Ahead of the release of their final manifestos, the AIADMK and DMK have announced vision documents which have become the subject of immense scrutiny. At a time when the state government's coffers are groaning under the weight of growing debt, both parties have promised women heads of households across Tamil Nadu Rs 1000 (DMK) and Rs 1500 (AIADMK) per month, if voted to power.

While this amount will only be offered to priority and non priority households which are eligible for commodities through their ration cards, the final amount that will be disbursed will still be sizeable. There are over 2.02 crore ration cards in the state of which 49,472 are no-commodity ration cards. This means that 2,01,81,922 card holders could be eligible for the amounts announced.

For the DMK this would mean an expenditure of Rs 12,000 per household annually which amounts to over Rs 24,000 crore in a year. Similarly for the AIADMK, this would add up to over Rs 36,000 crore annually.

In February, the interim Budget, presented by Tamil Nadu’s Deputy Chief Minister O Panneerselvam ahead of the Assembly election in the state reflected the crushing impact of the

COVID-19 pandemic on the state's dwindling finances.

In addition to a huge revenue and fiscal deficit for 2020-21, the debt to be incurred in 2021-22 is also expected to cross ₹5 lakh crore.

‘Contours of scheme not decided yet’

When TNM contacted political parties over these generous announcements, they were quick to defend the promises but did explain that the timeline is not certain and that the details of who the beneficiaries will be also needs to be worked out.

Speaking to TNM, Dr. Panlanivel Thiyagarajan, the head of the DMK's IT Wing explains that the party's first step would be to strengthen the state's economy and increase revenue.

"You are right in saying that Tamil Nadu is drowning in debt. Even to do compulsory expenses, the government is being forced to borrow money because income has dropped dramatically. Till Jayalalithaa was imprisoned in Karnataka (in 2014), income was 10.5% of the economy. After that it dropped to 8.5% in just one year. And currently one third of the state's revenue has been lost," he alleges. He estimates the total loss of revenue at Rs. 3 lakh crore due to alleged mismanagement and corruption. "So, now this disbursement of money promised cannot be done overnight," he alleges.

Furthermore, he points out that the promise was part of DMK’s 10 year vision.

"It is a goal we have committed to. We need to get our revenues back up to achieve this. First we need to restructure the debt and revenues need to be brought back to 10.5% . Then we need to go department-wise to fix problems," he says. "The damage of seven years of mismanagement has to be undone," he adds.

AIADMK Minister Mafoi Pandiarajan meanwhile says that in the larger scheme of government expenditure, the amount promised for households is not difficult to handle.

“This is another way of giving direct benefits, as part of the social justice scheme. If you look at the social security schemes, at least 35 lakh people get the Rs.1000 pension including for destitute women and elderly. We started this scheme with just 8 lakh people on the list but it grew significantly. The direct money transfer (for the recently announced benefit) will come up to Rs.36,000 crore and along with the promised gas cylinders, the total comes to Rs.41,000 crore. Adding this to existing social justice expenses, is not something that becomes impossible to do,” he says.

The Minister however does admit that the government will have cut down on borrowings and increase revenue simultaneously.

“Our borrowings have to be brought down and this will be done. Internal revenues will also rise this year and we will be able to manage. We are very stable as an economy. The numbers may be staggering but it doesn't affect our stability. There will have to be resource enhancement and improved revenue sources,” he acknowledges. “Quarries, sand, minerals can all be explored as a revenue raising method. 41,000 crore on a 23 lakh crore economy is not so difficult for us to handle. This will lead to more consumption and will stimulate demand. When demand gets stimulated, income will rise.”