Government Sector in Tamil Nadu

Fiscal fundamentalists can fret and fume. But the Tamil Nadu government is once again betting big bucks on social spending, as a necessary condition to achieve sustainable economic growth, if the sectoral allocations in the annual plans for 2004-05 and 2005-06 are anything to go by.

According to the just finalised plan for 2005-06, of the Rs 9,100 crore total, allocation for the social sector, including education and health, is Rs 3,688 crore, about 40.5% of the total. This is a 25% increase over the current year’s allocation of Rs 2,958 crore. In 2004-05, the social sector allocation was around 37%.

Add to this, around Rs 2,000 crore for agriculture, irrigation and rural development and the state is aiming to push its rural economy, along with ensuring better social services there, experts feel. “This goes in tandem with the government’s stated objective of ensuring quality services like health and education to all. At the same time, the Plan outlay suggests the government is serious about universal health, education and a buoyant rural economy,” said one.

However, the catch is how much is actually spent. Much of the earmarked funds may not actually spent for the intended purpose, feel many. It takes nearly three months for the state administration to allocate funds in the beginning of every fiscal. It takes another quarter for them to actually transfer the funds to the departments concerned. “So the real spending comes only in the last two quarters of the fiscal. Therefore, there is a major chance of a sizeable part of the allotted funds going unutilised. For instance, till September 2004, the total Plan fund utilisation by the departments concerned were estimated to be less than 40%. One has to see whether the remaining money would be spent and spent properly, rather than being squandered in a hurry to utilise the allocation.

However, sources close to the government say such bureaucratic hurdles would not come in the way of utilising Plan funds, since the administration is keen on implementing its programmes. The state administration has reportedly directed all departments concerned to expedite the utilisation of allocations.