India Intelligence Report

   TN Asks for Bailout Money


The recently elected minority Government in Tamil Nadu (TN) that came to power promising largesse to the population, has approached the Federal Government for more money to fund their electioneering policies.

The Dravida Munnetra Kazhagam leader and TN Chief Minister M.K. Karunanidhi is traveling to New Delhi seeking help to subsidize rice at Rs. 2 per kilogram, a color television for below the poverty line population and a grand waiver of cooperative loan to farmers costing USD 1.5 billion. In the rice idea, he has the support of the communist parties.

Finance Minister P. Chidambaram who participated in the same election campaign along with Karunanidhi had been cagey about whether such largesse can be funded. Dodging direct questions, he said that it can be done but needs to be done within the budgetary allocations for the state. Prime Minister Manmohan Singh who also campaigned for Karunanidhi also said that this can be done and that his Government will support Karunanidhi’s programs.

With a large and increasing revenue deficit, increased unplanned expenditure, and lack of movement on planned expenditure, it is not clear how the Federal Government will handle this request. A unnamed TN official was quoted saying “When the Center (Federal Government) has worked out special packages for some other States, we see no reason for not being able to get one for Tamil Nadu.”




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