Jayalalithaa does a reality check as fiscal situation is alarming and PSUs are struggling
The thrust of Chief Minister Jayalalithaa's televised speech on Thursday, outlining her six-month-old government's intention to revise the prices of power, bus tickets and milk, indicated for the first time that populism is slowly giving way to pragmatism in fiscal matters.
After kicking off a slew of initiatives revolving around distribution of free items and arguing spiritedly that concessions given to the poor could not be termed ‘freebies', Ms. Jayalalithaa has done a reality check: the fiscal situation is alarming, and public undertakings are struggling under unsustainable levels of debt.
“While doing a department-wise review, I came to know that the Tamil Nadu Generation and Distribution Corporation, State transport undertakings and other public sector institutions are in danger of reeling under mounting debts and financial travails,” she said.
The multiple hikes she has proposed may invite comparison with the fiscal reform programme she initiated during her earlier 2001 regime, and spark speculation that she may once again embark on a similar initiative. However, anticipating the possible adverse impact that such a perception may have on her government's popularity, Ms. Jayalalithaa has sought to soften the blow by making it clear at the outset that any power tariff revision will not affect the free electricity supply being given to farmers, weavers and hut dwellers. And that government subsidy would continue to take care of the interests of domestic consumers, whose consumption is low.
In 2002, her government had spoken about the danger of the State's financial stability being derailed by mounting commitments in the form of employee compensation, pensions and heavy borrowings. She had then taken up fiscal, budgetary and administrative reforms, including attempts to downsize the government, rationalise subsidies and bring about changes in the public distribution system. However, these measures had come with a heavy price – a steep decline in her government's popularity.
After the ruling AIADMK drew a blank in the 2004 Lok Sabha election, she resorted to an omnibus rollback of most major decisions she had earlier made. Among the reversals was the withdrawal of the power tariff revision made in 2003 and the plan to meter farm pump set connections.
The current revision of bus fares and milk prices, and the planned power tariff revision, is unlikely to go down well either with the political parties or the people.
It is in this context that Ms. Jayalalithaa assailed the Centre's attitude towards the State.
“The Union government is repeatedly raising fuel prices and refusing to extent any special loan facility to the State; it is not ready to part with 1,000 MW of power from the Central pool that we have sought, and the State's debts have crossed Rs.one lakh crore. In this backdrop, who can I approach to keep our public sector undertakings afloat except the people of Tamil Nadu?” she asked.
Ms. Jayalalithaa said she had been hoping for the last six months that the Centre would help to some extent in her efforts to restore the State's financial health. “But the Centre shows a step-motherly attitude and has totally neglected Tamil Nadu.”
Keywords: fiscal reforms, Price hike, milk prices, power tariff, bus fare, Jayalalithaa government
If freebies are wrong then why do people make parties which promise
freebies win...Most of Govt revenue(nearly 80%) goes into paying govt
officials...can't this be corrected...why cannot govt enterprises be run
like private companies...as said in the article reducing the pay of
officials last year cost the part dearly...
our cm is expecting the help from the centre. Did you hear any of the calls from the centre? then how they will come to rescue.
our cm has cancelled the meetings of the Collectors with the Union Minister (even he too from TN), is it a sign of respect and honour., then how you can expect from them...
freebies are from the public funds; and the same have to be paid by the public again in the name of hikes..
then what is the use of those freebies., which is not necessary to all... we know how to buy the computer and when to buy and what to buy.. in the end., Ms. JJ got her part of profit or her party's member have got the tender..
the beneficiary is she and her party and the loser is the public....
Finally someone is talking sane. Free electrical power to agriculturists is okay but but not without discriminating who is the poor farmer and the rich landlord. Install the meters whereever electrical power is consumed. Identify the units that may be the average consumption for a small landholder of two acres for cultivating two times paddy (short + long durations) and probably another time of cash crops (groundnut or pulses) and permit those units as free to the farmers and consumption beyond that must be charged.
In fact, the hike in these areas are on the expected lines and it's totally illogical to keep blaming the Central Govt. for everything. These people did not consult center before committing the 'freebies' and Ms. Jayalalithaa did inform in every public meeting during elections that the TN govt debts have crossed 1 lac crore. The fiscal correction is inevitable and as a politician she has done it after the "Local Bodies' elections. The worst affected is again Middle & Upper-Middle class and I'm positive that there won't be any roll-back on the recently hiked ones and also on the imminent one on power tariff. One small advise to our CM is that she should pursue 'friendly' attitude with the Center and not 'hostile' one.
Is the author of this article , an employee of Hindu or a spokes person for Jayalalitha ? It is the State's responsibility to establish a cordial relationship with the Center, not Vice Versa. Freebies are bad, especially when you have no idea about how to pay for it. Generally, all subsidies and social welfares provided to the citizens by govt are paid for by generating more revenue, not merely taxing people but making the state an attractive place for business. Businesses bring in revenue by way of capital infusion and tax revenues, people get money from jobs and state, from the taxes.
How do you think Gujarat is thriving , its run by BJP , not Congress. CM should not be egoistic but a servant for the people. So now go campaign to corporates to start business in Tamil Nadu, that might solve a lot of problems.
In the last revision, tariff for domestic consumption of bimonthly 600 units and above was hiked without touching the lower slabs. If it is milk and busfare, all sections of society are included in the hike but in respect of power, lower domestic categaries are not touched which is unfair. Such kind of no hike for them will be a problem in future just like agriculturists and weavers who demand free power. Instead, domestic slab rates of Rs 1.10, 1.30, 2.60 and 3.50 may be hiked to 1.50, 2.00, 3.00 and 4.00 without any rise for consumption above 600 units or at Rs 6.00 if it is to be hiked. TNEB can not hike its tariff in the near future again and hence lower categories should also be included. Further, wherever possible, state should reduce its staff strength and save the expenditure. To ease the public transport,it would be in the interest of public, state and private car owners if a way is find out from willing car owners to make use of vacant seats in their cars by fixing a fare.
Jayalalitha must have made all these points (fare hikes) very clear to the people of Tamil Nadu before the Elections and coming to power. She has fooled the people with support from media. If "corrupt" Karunanidhi has managed to keep these prices low, "Un-corrupt" Jaya is increasing the charges for these public services some thing is totally wrong. She was claiming that she would eradicate Corruption. She has been dodging the courts for decades together is another matter! If elimination of corruption is only leading to steep increase of public services we rather eliminate "un-corrupt" Jaya from power and keep the prices down. It is a criminal logic that once elected, they can carryout any anti people activities and people are powerless to stop these crimes. Political process in India needs to be changed to ensure that People are in control of those who they elect. And recall and punish those who do not perform to the expectations of the people. We need to urgently reform this system.
anything and everything free will only end up in fiscal deficit and financial disaster, the Dravidian parties must give up this policy and every individual owes a lot of responsibility and if he or she wants to see the state progress or their own progress in life should work for his daily bread,it is unfortunate now the attitude of majority of people are disgusting and expect the Govt to offer more freebies.Our CM must also realize she has a very unfriendly Govt at the centre and the present UPA govt is totally unfriendly.
When the State faces acute power shortage, I could not understand the inaction of the chief Minister inconvincing the agitating people so that the Commissioning of Kudankulam Nuclear Reactor may be expedited. When the Chief Minister is not attending the meeting of NDC , how could she convince the centre to allocate more funds to Tamil Nadu. If only she emulates MGR in centre - State relations the State could get more benefits. She continues to ensure that the District Collectors are not attending the meetings scheduled to be attended by Union Minister belonging to the Tamil Nadu , this is unprecedented. You have indirectly told the people , GET THREE FREE , PAY MORE FOR THREE.
Plan to meter farm pump set connections is a must. At least 10 paise per unit should be charged. Most farmers can afford it. Above all, they will not taken free wastage for granted.
Please Email the Editor