Rs 60K crore to go towards welfare next year

The cost of being a welfare state is likely to be `59,185 crore this year. The state budget presented on Wednesday has calculated that subsidy and transfers to local bodies has overshot the estimates for 2014-15 by `6,542 crore. For 201516, the subsidy and transfers head will increase by `10,117 crore over the final figures for fiscal year 2014-15.
The subsidy component goes to paying for the state government's efforts to protect the poor from inflation as well as for freebies like mixies, grinders, fans and laptops to school and college students.Transfers include funds allocated to local bodies and panchayats for infrastructure projects and schemes. “Nearly `9,600 crore will be transferred to local bodies, which is around 10% of the total tax revenue,“ said a senior finance department official. Among the subsidies, power and food constitute a major portion. The subsidy paid to Tamil Nadu Electricity Board (TNEB) in the next financial year is likely to be `7,136 crore. The government pays to the board as per the orders of the Tamil Nadu Electricity Regulatory Commission (TNERC) for providing free power to hutments and farmers and also for absorbing the hike in tariff for domestic consumers up to 500 units. The state provides rice free of cost to ration card holders. The state also insulates the poor from the vagaries of inflation by providing condiments at a lower price. This is likely to entail `6,530 crore in the coming year.
The government has allocated `2,000 crore towards distribution of 45 lakh mixies, grinders and fans. Similarly , `1,100 crore has been allocated for distribution of free laptops to school and college students. By not increasing bus fare despite hike in diesel prices and for free bus passes for students, the government has allocated `980 crore to the transport department.
“Subsidies are justified as long as they reach the needy . But in the power sector, the boards crosssubsidise which increases the tariff for one section while lowering for the other,“ said former finance commission member D K Srivastava. “Lowering the tariff for some consumers and passing on the subsidy to others by increasing their tariff would lead to inflation,“ Srivastava told TOI.