Decoding the Tamil Nadu Budget

The focus at a time like this should be on shoring up demand and enhancing people’s purchasing power

Expectations from the revised Budget for 2021-22 presented by the Tamil Nadu government were high since this is the Dravida Munnetra Kazhagam (DMK) government’s first Budget after 10 years of being out of power. The Budget needed to stand out and reflect the ideological commitment of Dravidian politics. But did it succeed? Perhaps, but not in all respects. It could have addressed the pandemic-induced economic crisis more directly, which is important since Tamil Nadu’s economy has seen a decade of stagnation, slipping in its unique trajectory of high growth and relatively equitable development. In the run-up to this Budget, State Finance Minister P.T.R. Palanivel Thiagarajan released a white paper, a comprehensive analysis of the State’s financial status and its economic condition. While the white paper offered a diagnosis of the ailing economy, the revised Budget was to provide prescriptions to revive the economy. As is by now well acknowledged, the pandemic has affected the urban poor, informal workers, and small businesses disproportionately, leading to declining wages and job losses. Tamil Nadu has been particularly badly hit by the pandemic. A study by Azim Premji University suggests that Tamil Nadu was among the worst-hit States in terms of the lockdown-induced economic distress leading to disproportionate job losses.