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TN budget likely to shift towards targeted subsidies

- August 12, 2021

Chennai, August 12 (BPNS)

The Tamil Nadu budget to be presented on August 13 by the state finance minister, PTR Palanivel Thiagarajan is likely to have a paradigm shift as far as subsidies are concerned. The Minister while bringing out a white paper on state’s finances has subtly indicated that the subsidies are being enjoyed by people across economic backgrounds.

Successive government to rule the state, both AIADMK and DMK had extended subsidies to all classes of people. These subsidies include crucial sectors like electricity, water, and civil supplies and according to the government’s approach seen in the White paper, the finance minister will be taking a targeted approach towards subsidies.

The finance minister in his white paper had hit out that those who Consume more electricity is receiving more subsidies. As the records with the state electricity board show that there is an under-recovery of electricity bills at Rs 18,735 crore in the financial year 2020-21.

It is to be noted that all domestic consumers of Tamil Nadu enjoy a free 100 units of bimonthly power. The white paper also hits out against the unmetered water supply at Chennai and said that this was an unfair and regressive system.

Most of the water supply connections that are not metered are to huge houses and mansions and this was what the minister was trying to portray through the white paper.

While these statements in the white paper can be seen as an indication of targeted approach towards subsidies, how the government will implement it is a million-dollar question. Many permutations and combinations will have to be taken into account before the Finance minister embarks upon measures like targeted subsidies.

Manikantan Krishnan of Salem Study centre, a think tank on economic and business studies while speaking to BPNS said, “The white paper has come out with all the major problems being faced by an economist before preparing a budget but how the problems would be solved and what are the new measures to be taken. The finance minister will have the drive to take some bold measures but the DMK as a political party which is banking on populist schemes will wilt under pressure from grass roots and nothing concrete might happen except for a little reform here and there.”