Poll Promises vs Public Finance Trends On West Bengal And Tamil Nadu

The incremental budgets for the two states are expected to add pressure on state finances, potentially impacting new investments and capacity addition in the near term.

Both West Bengal and Tamil Nadu have recorded fiscal deficits of more than 3% in the last six years.

To ensure debt stability, the 16th Finance Commission urged strict enforcement as per clause (3) of Article 293 of the Constitution.

The Commission recommended that states' fiscal deficit should continue to be capped at 3% of their respective GSDP, to be strictly enforced under Article 293(3) of the Constitution.

Data from recent elections show that the average fiscal deficit in the pre-election year across Bihar, Jharkhand, Maharashtra, Haryana, Odisha, Andhra Pradesh, Telangana, Rajasthan, Madhya Pradesh, Chhattisgarh and Karnataka rose from 2.5% to 3.4% in the post-election year; except in Bihar and Haryana, the deficit rose in nine of 11 states.

Estimated incremental cost of TVK's programmes in Tamil Nadu is Rs 87,900 crore, or about 2.2% of the state's GSDP. This includes cash transfers of Rs 2,500 per month to women under 60, six free LPG cylinders per year, and Rs 15,000 per year investment assistance for land-owning farmers, etc.

Estimated incremental cost of BJP's programmes in West Bengal is Rs 72,600 crore, or about 3.4% of the state's GSDP. This includes cash transfers of Rs 3,000 per month to eligible women and Rs 3,000 per month unemployment aid for youth.

Elections in West Bengal and Tamil Nadu have ended; the BJP achieved a historic win in the east, while the new party TVK became the single-largest party in the south.