Is Tamil Nadu ready to give up government freebie schemes?

The DMK says we need to move beyond just freebies.
Is Tamil Nadu ready to give up government freebie schemes?
Is Tamil Nadu ready to give up government freebie schemes?
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Ahead of the TN Assembly elections in 2016, the DMK has begun the exercise of holding consultations to prepare the party manifesto. A committee consisting of TKS Elangovan, TR Baalu and Kanimozhi has been touring the state to seek views from various quarters. The committee has reportedly hinted that the party is trying to move away from the ‘freebie-culture’ in Tamil Nadu and focus on issues of growth and development.

Elangovan told the Times of India in Madurai, “We have come to know that the main issues concerning people are water, electricity and employment. And traders want reforms in taxation. We will try to work out measures on those.”

Speaking to The News Minute from Pudukottai, Elangovan clarified that they have not decided to move away from freebies, they are only holding consultations. “But that is what people are saying. The freebie era is over. We are not going to do away with any of the schemes. A lot of the schemes help the poor. But we have to do more than that and look at other things,” he said.

Even so, this is a break from DMK’s long-standing strategy to flush the state with government’s largesse, from Re. 1-per-kg rice to free television sets. Many of its electoral victories in the past have been credited to their freebie schemes.

There is little doubt that the u-turn is sensible and that the party must be commended for being bold enough to voice their concerns even if seen as unpopular.

Over the past 4 years, the Jayalalithaa regime has changed the face of Tamil Nadu with ‘Amma’ branded ‘social-welfare’ schemes being rolled out one after the other. The schemes include free rice, cheaper canteens, pharmacies, water bottles, grinders, mixers, spectacles, bicycles – you name it and Amma gives it.

Is the state then ready to give up freebies? Is the DMK on the right path?

An informed reader could assume that Amma’s freebie onslaught is affecting the macro-economic situation in the state by increasing the financial burden and therefore the debt.  The person would be assuming wrong. The GSDP-debt ratio has actually improved in the past four years, and was much better than states like AP, Karnataka, West Bengal and Kerala. Essentially, apart from cases of state owned units like the power corporation, the state is rolling in a lot of cash and the politicians don’t mind doling out.

Director of the Madras School of Economics KR Shanmugam, speaking to the Economic Times, echoes those sentiments. "The state government is using existing infrastructure and resources mostly for these freebies plus a small subsidy is involved. The state government finances have been managed well for the past 10 years. All fiscal parameters are kept as per FRBM [Fiscal Responsibility and Budget Management] norms. The state government's finance is not affected because of freebies,'' he told ET.

Naysayers have pointed out to the financial shambles that the state power corporation is in, but that is due to the maladministration in that particular sector.

There is however one economic problem – how the state has managed to encroach the market and become a monopolistic player, competing with other private players. This could mean that many smaller businessmen have lost to the monopoly of the state. Even if that were true, those from the lower strata who have benefited directly from the freebies could be more in the number than those who stand to lose business. 

The freebie culture is dangerous for any economy, but it might still resonate with the people electorally.

Further, speaking to The Hindu, A. Narayanan, social activist and Editor of the Tamil magazine Paadam said, “There is no doubt that the culture of freebies has resulted in the depoliticisation of citizens in Tamil Nadu. By providing candies to the voters in the form of free this and that, the masses have become dependent on the ruling class with the result that there is no true empowerment. This has resulted in the people not being able to critically evaluate their own leaders.”

This is indeed a sad state of affairs, but again, this perhaps only means that people will now vote for those who promise to give them more.

“Any political party that rolls back some of these schemes will be beaten black and blue,” says C Lakshmanan of the Madras Institute of Development Studies, referring to schemes which help the poor, like free rice, goats and cows. “It is superficial to call all the schemes as just ‘freebies’ they have a huge social and financial impact on the lives of the poor,” he said, speaking to The News Minute.

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