The fiscal sustainability of welfare schemes and their impact on the development of physical and social infrastructure of the State formed the primary talking points at The Hindu Centre’s first Briefing on ‘The Politics of Welfare in Tamil Nadu’ held on April 30, 2016.
The panellists —Mr. G. Viswanathan, Chancellor of VIT University and former Tamil Nadu minister, Dr. S. Narayan, former Union Finance Secretary, Prof. A. Vaidyanathan, Economist, and Ms. Geetha Ramakrishnan, advisor of the Unorganised Workers’ Federation-Tamil Nadu — dwelled upon the longstanding debate over the fiscal prudence behind these welfare schemes (sometimes loosely termed freebies) pitted against the development of the State’s physical infrastructure, including power, roads and transport facilities, or of social infrastructure, including education, health, and social security for the poor, the aged and the infirm. The discussion was moderated by N. Ravi, Director, Kasturi and Sons Ltd. and former Editor-in-Chief, The Hindu .
Setting the context for the Briefing, Mr. Ravi stated that apart from the regular expenditure on welfare (including food subsidy and maternity assistance), Tamil Nadu had many innovative schemes that take up huge outlays annually. “For instance”, said Mr. Ravi, “the distribution of saris and dhotis costs Rs. 1,200 crore annually. Can these schemes be sustained indefinitely?” He further stated that such welfare schemes worked in the electoral arena and the promises of these schemes should not influence the electorate and the electoral system. He said, “The trust of voters should be sought only on the basis of those promises which can be fulfilled.” He followed this up by asking, “When doubtful economics makes for good politics, who mediates what is good for the state?”
Mr. Viswanathan said that India should not be compared to the Scandinavian countries, which were welfare states. He noted that welfare schemes in Tamil Nadu have cost the exchequer enormous sums of money and said that many schemes that aim at subsidies (bus subsidies, for instance) were not required. He said, “We would have been bankrupt had we been an independent country.” Mr. Viswanathan further said that perhaps such schemes made people lazy. He said that TASMAC (Tamil Nadu State Marketing Corporation), the State body that holds the monopoly over liquor distribution, contributes about Rs. 30,000 crore through taxes. This money then goes back to the people through welfare schemes, who in turn spend it on TASMAC and buy alcohol. He asked, “If you give 30 kilograms of rice free, why would anybody work?”
Dr. Narayanan took a historical perspective on the issue and spoke about why these schemes had worked in Tamil Nadu much better as compared to other states. He reminded the audience that in 1977, the World Bank had entered Tamil Nadu through the Integrated Child Development Scheme and had tried to pilot the Tamil Nadu Integrated Nutrition programme. The then Chief Minister, M.G. Ramachandran, felt that supplemental feeding needed to be universalised. “By 1985-87”, said Mr. Narayanan, “the World Bank admitted that universal feeding was a better target than supplemental feeding.” According to him, this worked because there was a set of bureaucrats at that time at the helm that put a system in place that has been delivering even today. Ending his presentation, Mr. Narayanan, however, ended with a word of caution that welfare schemes should not replace the development agenda of the State.
Prof. Vaidyanathan stated that welfare schemes needed to be categorised according to their internal logics. He also said that food subsidies were not justified on this scale. In the absence of research that would give the state indicators on consumption patterns of food grains in general, he said that it was difficult to assess who was benefitting from such schemes.
Ms. Geetha, while decrying the State’s use of welfare schemes to entice voters and political support, said that if channelised well, many of these welfare schemes would have led to sustainable resources for the people. Giving the example of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), she said that if properly utilised, every village would have had adequate water resource. “There is a system of injustice in our country and it is unjust to very ordinary people. There is land all over the country, which has not been redistributed. We need to hold a public hearing on this,” she added.
The Hindu Centre’sBackground Note on The Politics of Welfare in Tamil Nadu.
Full text : The Politics of Welfare in Tamil Nadu: Opening Remarks by N. Ravi in PDF format.
Listen to the audio recording of the event here.
Link : Fiscally Unsustainable Election Promises in Tamil Nadu by R. Srinivasan .
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