Inheriting a Crisis

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The interim budget of Tamil Nadu for the year 2011/12 shows a marginal revenue surplus of `439 crore as stated by the state finance minister in his budget speech. It is not an exaggeration to say that a budget can hide many things. The revenue receipts might have been projected at a higher than normal growth, as some taxes are expected to grow more than 25 per cent, and on the other hand, revenue expenditure might have been underestimated.

The revenue expenditure is expected to grow at 4.45 per cent during 2011/12. This is an underestimate unless the government drastically cuts down on other revenue expenditure. The salary bill of Tamil Nadu is estimated at 49 per cent of the total revenue expenditure, which will grow by at least six to eight per cent if both annual increments and periodical dearness allowance releases are taken into account. This would mean hardly any growth in the rest of the revenue expenditure.

As per newspaper reports, the Tamil Nadu Electricity Board is in a state of financial collapse. What the true state of its finances is, and how much the government owes it by way of subsidy is not known. This is one area with which the new chief minister should engage very urgently, as the power supply in Tamil Nadu is deteriorating fast and industries may suffer, affecting employment and new investments.

Chief Minister J. Jayalalithaa has to examine how much of the receipts under special programmes received from the government of India has been used, misused or not used at all in order to safeguard herself. It is more than likely that the Centre will encourage an audit, which will give it and have an excuse to withhold grants to Tamil Nadu just to needle her government. The expenditure commitments of the previous government on freebies and other contracts which have not been discharged will require attention.

Jayalalithaa has also been very generous in her freebie announcements, the cost of which have to be urgently worked out and weighed against the development expenditure immediately required in the areas of power generation, agriculture, education and health.

Chennai and other cities have started looking like slums compared to some cities in Gujarat or even Karnataka. Past governments in Tamil Nadu, including hers, have totally neglected the waterways in Chennai, which could, if developed, reduce congestion on the roads by 50 per cent. The Jawaharlal Nehru National Urban Renewal Mission could be fruitfully used for this purpose. The annual expenditure on repairing monsoon damaged roads in Chennai and other cities could be saved if a well thought out project for concreting all city roads could be prepared for execution in a timebound manner.

Whatever the Tamil Nadu government may say, agriculture is in a state of crisis. Very productive lands are being abandoned or converted for non-agricultural use. Programmes and projects suffer as farmers are unable to find labour. The author has seen people under the Mahatma Gandhi National Rural Employment Guarantee Scheme lounging by the roadside near Chinnambedu, close to Chennai, ostensibly doing “productive” work, while farmers complained to him that they were not getting labourers for the SRI (or system of rice intensification) cultivation of paddy expected to increase yields by 40 per cent.

All these and many more areas require priority attention if Tamil Nadu has to improve its growth rate.