T N Ninan: Free TV

WEEKEND RUMINATIONS

We've heard these promises before: land for the landless, subsidised rice supply, subsistence allowances for the unemployed, pay-outs for pregnant women, free electricity... None of that raises an eyebrow, for these are the things that we have come to expect politicians to promise at election time. But a free colour TV set to every family?! On top of which, also a free cooking gas stove?

When the Dravida Munnetra Kazhagam (DMK) included all these in its election manifesto last week, in the run-up to the Tamil Nadu assembly elections, the TV set and gas stove hit the headlines""as they were guaranteed to do. And the rival AIADMK's Jayalalithaa quickly damned the offers as unaffordable.

Well, is it so? You can get a good colour TV set for about Rs 8,000. If you buy in bulk, you could get some hefty discounts and bring down the price to Rs 6,000. And Tamil Nadu has about 15 million families. Multiply the numbers and you get a total cost of Rs 9,000 crore. If you cut that to families who don't already have TV sets (let us assume that you can do a TV census), then the cost would halve to Rs 4,500 crore. If the sets are distributed over five years, the all-in cost is comparable to the bill for the food subsidy that the country already lives with, with no one gasping in shock at the cost (about Rs 1,250 per family per year, for a national total of over Rs 26,500 crore""each year).

In fact, if you add the cost of free electricity, free water, subsidised fertiliser, subsidised gas, subsidised kerosene and all the other subsidies that more virtuous entities than the irresponsible DMK have been doling out over the years, the all-in payout per family is very much more than the gift of a TV set and gas stove.

This opens up interesting lines of thought. What if a political party were to scrap all the subsidies that exist today (there is, after all, evidence that most of those subsidies don't reach the poor) and offer instead that every industrial worker would get a free bicycle (cost Rs 1,500), and every housewife would get a free sewing machine (ditto), and every schoolchild would get free books and free school uniforms ... so long as the promises are of discrete items that are to be bought just once, the bill would be smaller than that for today's subsidies. If the perceived value of the freebie is substantial (remember that the promise of free sarees has caused stampedes and deaths in Tamil Nadu), it would bring in the votes, while the public exchequer would gain. Indeed, if the goodies given out are utility items that might improve productivity in the field and factory (say, a free farm implement), then there would be beneficial results for the economy too.

The great advantage with a free gift like a TV set is that it does not require much effort to deliver on the promise: just go buy them and hand them out in the full glare of publicity. And if you are creative, voters can be allowed to exchange what they get for something else in the market. And then, if the government were willing to do some real work, and a political party were to think one step ahead and offer free medical insurance""as Paul Krugman is advocating for the United States""that opens up other lines of thought, doesn't it?

In other words, all that you have to do is look at today's subsidy bill in its totality, and ask how you can get more bang for buck in a virtuous way, and the possibilities seem limitless. If the DMK's seemingly outrageous promise of a free TV set makes people sit up and look at the issue from ground level up, why, we may finally tackle our subsidy problem! On the other hand, who knows, the politicians will promise both the existing subsidies and new gifts. And then we would really be in the soup.