A lot of questions are being raised about the feasibility of the DMK proposed "Rs.2 a kg" rice scheme. As I wrote in an earlier post, it works out to about Rs. 540 crores a year. Now, my question is, why can't the government do this? After all, it will add to the deficit when the next budget is tallied.

1. Does anyone care about the fiscal responsibility of state governments? Who is supposed to monitor the deficits and make sure state governments fall in line?

2. Is there an upper limit on the amount of deficit a state government can have?

3. If the budget goes red, can a court dismiss the government? I am guessing that if a legislative solution is available, it won't be enforced since the legislature will be controlled by the ruling party. So, can a court do it? If not, I don't see any accountability at all. Atleast, until the next elections.

4. Are there credit ratings for state governments? I just looked up S&P ratings, there were entries for State of Tasmania, city of Toronto etc, but no entry for State of Tamilnadu. When will the credit rating for Tamilnadu fall off the cliff, at a deficit of 500 crores? 1000 crores? When will the state governement officially be of "junk" status?

5. In addition to (4), does the state government even borrow in the open market? Or, does its borrowings all come from the likes of World Bank/RBI?

6. Can the Central government invoke Article 356 and dismiss a state government, for failing to keep the budget deficit in check?

I don't know the answers to any of these, but it looks like the state government can do what it wants. It can rake up huge deficit, pass it on from year to year, and if the party loses the next elections, hand off the deficit to the successor and go. Scot free.

So, unless I am mistaken, there should not be any problems in implementing the Rs.2 a kg rice scheme. The DMK government can do that, as well as give away free Color TVs and more.

P.S. Former DMK minister Ponmudi has said that he will resign from his MLA post if their government doesn't give the 2 a kg rice within a month of their rule. Wonder if Kalaignar will also announce likewise :)

1. While reading news articles on Tamilnadu politics, especially in tamil, the language and the use of words give away more than the content itself. Reading between the lines helps a lot in this context. I found a good example of this, in this dinamalar article, the reporter writes on how the Congress-I party cadres are not happy with the candidates list. Apparently, many true workers of the party were left out, but rich folks got rewarded. The classic line in this article was: "Salem-1 thoguthiyai Suresh enbavar vaangiyuLLaar. " Ouch!

2. Mr.Peter Wuttings, who has promised outside support for HotMachiHot on the floor of the parliament, chimes in:

I think Mu.Ka. recruited Bagyaraj in a lame attempt to split the Kavundar
community votes which might otherwise be thought headed towards Vai.Ko. and Co.

From Assistant Director to Murungakkaai Philosopher to MGR Vaarisu to Music Director to Mu.Ka. backer...Bagyarajaa yEn thalaivaa vErkkaathu pEsurappO? innoru kerchief eduththukkO naina? edhO weight-aa oru manjaa cover nerayaa thuttu maattichinnaa santhosap padurOm. unga konguthamizhisaiyil thOzhar Nagoor Hanifa paadi oru prachchaarap paattu veLiyidanumnu vENdi kEttukkirEn.

டைரக்டர் கே.பாக்யராஜ் தி.மு.க.வில் சேர்ந்துட்டாரு (பாரிஜாதம் ரிலீஸ் பண்ணற ஐடியாவே இல்லியா?). தி.மு.க தான் எம்.ஜி.ஆர் விசுவாசிங்களோட உண்மையான கட்சின்னு வேற சொல்றாரு. விட்டா எம்.ஜி.ஆர் இப்போ உயிரோட இருந்தா கருணாநிதியோட பக்கத்தில உட்கார்ந்துக்கிட்டு தி.மு.க.வில ஸ்டாலினை எப்படி தலைவராக்கிறதுன்னு பேசிக்கிட்டிருப்பார்ன்னு சொன்னாலும் சொல்லுவாங்க.

பாக்யராஜுக்கு என்ன கடனோ என்னவோ, ஏதோ அவருக்கு இதனால ஒரு அஞ்சு பத்து லட்சம் கெடைச்சா சரி!

ஆனா ஒண்ணு, இனிமேல் தி.மு.க மேடையில குட்டிக்கதைங்களுக்கு பஞ்சம் இருக்காது!


பி.கு. வெற்றிகொண்டான் கட்சி மாறி அ.தி.மு.கவுக்கு போகப்போறாருன்னு பட்சி சொல்லிச்சே, அது உண்மையா?

The Hindu has an article on the economics of Color TV promised by DMK.

He said there were 1.5 crore ration card holders in the State. Each cardholder was entitled to 20 kg rice a month. At present, it was being sold at Rs.3.50 a kg. If the price were reduced to Rs.2, the additional subsidy burden would be Rs.1.50 per kg. For the 30 crore kg that would be dispensed through the Public Distribution System, the additional subsidy would be Rs.45 crore. This would come to Rs.540 crore annually.

Explaining how the DMK would implement the scheme if it came to power, he said there was a total of 156 lakh families in the State. Of this, 53 lakh were below the poverty line. At Rs.2,000 a television set, and assuming that all those under the poverty line needed to be given one, this scheme would cost only Rs.1,060 crore. If the DMK came to power, it would implement the programme over two years. The Government needed to spend Rs.530 crore a year.

Stressing that the schemes would not be a burden on the State, he added additional resources could be mobilised by targeting revenue generating sectors such as liquor manufacturing and trade.

Going by this argument, if the government chooses not to give color TVs, say, then it can afford to give Rice at an additional Rs1.50 off. That is, they can give Rice at Rs 0.50 per kg!

At Rs 2,000 a set, what kind of TV will you get? If people are given the choice, I guess they will go in for Rice at 50 paisa, rather than a 14" barebones TV.

Wonder if the govt will also pay the cable TV bill.. hmm..