File photo of beneficiaries receiveing color TV sets from then deputy CM MK Stalin.

CHENNAI: The freebie culture in Tamil Nadu that has become the mainstay of Dravidian politics is pushing the state downhill on the fiscal front.

Even as TN increases its social sector spend to a whopping Rs 78,100 crore, its outstanding liabilities has touched Rs 2.56 lakh crore as per data with the Reserve Bank of India.

Also, the state’s social sector expenditure is nearly double that of its capex (capital expenditure) at Rs 33,800 crore in 2016-17. From the 2006 elections to 2011 and to 2016, both AIADMK & DMK have been competing with each other to offer colour TVs, mixies, cash doles, gas stoves, free land, rice at Rs 2/kg or free cycles, sarees, dhotis — the list is endless.

"The curse of the freebie culture started in 2006, when DMK chief M Karunanidhi announced free colour TV sets and rice. It was for the AIADMK head J Jayalalithaa to follow suit. In a competitive spirit, she announced a slew of freebies in 2011 and came to power. And the same culture continued in 2016, bleeding the state of its resources. TN is a highly productive, competitive state and it is a crying shame we are in this situation," says S Gurumurthy, political commentator and editor of Thuglak.

The government can defend itself by saying that its social sector expenditure was not going towards freebies, but towards health, education, roads and literacy.

But does that argument hold water? RBI data shows that Tamil Nadu instead of improving on vital social indices is actually pushing the state down.

Tamil Nadu is at 16th position nationwide when it comes to literacy with a 80.09% literacy rate. It is much behind Maharashtra, Manipur, Chandigarh, Puducherry, Delhi, Goa, Kerala, Nagaland and Tripura. Of course, there is always a high base in TN and the rate of increase in literacy rates may be slower.

With a poverty rate of 21.2%, the state also has a high number of poor people. As many as 1.2 crore people of TN’s total population of 6.78 crore are poverty-stricken. TN has the 7th highest population of BPL families in the country.

This shows that the freebie culture, which is pushing up the debt ceiling of Tamil Nadu is also reallocating money away from real needs.

The state’s current outstanding liabilities stand at Rs 2.56 lakh crore in 2016-17; up by 18% from 2015-16 and 67% from five years ago.

The state also has the notoriety of being the fourth most debt-ridden state in India after Uttar Pradesh, Maharashtra and West Bengal. TN’s current reserve fund of Rs 1,920 crore is not necessarily confidence inspiring given the extent of its liabilities, RBI data said.

"We have always been at third place in terms of revenue generation in India. Our GDP has been high, as has been our production and industrial capabilities. For instance because we have a diversified industrial workforce — automotive, engineering, chemicals, plastics, garments — we have been able to weather downturns in the domestic and international economy. We were delivering steady growth of 7% to 12% for the past 20 years. Our real problem comes from mismanagement of state finance," says P Ravichandran, chairman, southern region, industry body CII.

