Tamil Nadu Assembly elections | Can the State afford LPG subsidies?

Keeping in mind the spike in the prices of liquefied petroleum gas (LPG) cylinders that is hurting consumers and hoping to hit the right chord with the middle class and the lower middle class, political parties have promised voters a subsidy on the refills. A domestic cylinder with 14.2 kg of gas is sold at ₹835 in Chennai (as on March 1), and the price varies according to the bottling plant. The subsidy is a meagre ₹25 a cylinder.

The DMK has promised to give ₹100 per cylinder. The State has over 2.20 crore LPG connections. If two crore consumers get ₹100 per cylinder a month, it amounts to ₹200 crore. Besides subsidising LPG cylinders, the DMK has promised to reduce the prices of petrol and diesel, meaning a considerable dent in the State’s revenue.

Similar is the case with the AIADMK’s promise of six free cylinders a year. With ₹800 as a base price per cylinder and 2 crore family cards, it will be ₹1,600 crore in expenditure every two months. In its manifesto released on Sunday, the party has announced that it will take steps to increase the quantity of subsidised diesel and kerosene supplied to mechanised and country-craft fishermen.

An oil industry expert said that after COVID-19, the situation was so bad that even the Centre was not able to increase the subsidy. “They are slowly reducing subsidies and government interference in many sectors. In such a situation, these promises don’t seem to be keeping the State’s financial well-being in mind,” he said.

A former IAS officer and said they would only lead the State to a financial mess from which it could not be retrieved. “We are now a power surplus State. These promises, if implemented, would lead us to a situation wherein we won’t be able to pay our power dues and we will be pushed back to the dark ages,” he said. Another former official said it could even lead to the cutting down of capital expenditures and affect the basic services like drinking water supply.

However, another former official said the parties that have made such promises should know from where to raise funds. “Raising the prices of liquor and municipal taxes would be the possible avenues. Since the State already has good infrastructure, it won’t have to cut down on anything. It is only the question of maintaining what is in existence,” he said.

Former IAS officer M.G. Devasahayam recalled how in 2016, too, both parties had announced many freebies. “A few of us former officers gave a strongly worded letter to the Election Commission saying it violated the model code of conduct. The Commission asked the parties to financially justify their promises, which they could not. The present promises, too, are violation of the code,” he said.

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