Chief Minister C Joseph Vijay began his tenure by highlighting the previous government’s debt burden of over Rs 10 lakh crore. Yet, within hours of taking office, his government also moved to implement major welfare promises, including 200 units of free electricity for domestic consumers. The political symmetry is striking. In 2021, when MK Stalin came to power amid strong anti-AIADMK sentiment, his Finance Minister P Thiaga Rajan similarly released a white paper describing Tamil Nadu’s finances as “dire” after a decade of AIADMK rule. Five years later, the State finds itself in a familiar cycle: a new government, another fiscal warning, and another wave of welfare commitments.
This reflects a larger political reality. While ideological distinctions between left and right have blurred in India’s welfare politics, Tamil Nadu remains unique for how deeply institutionalised welfare has become. Governments change, but welfare competition survives. The State’s noon meal programme now feeds nearly 4.47 million children daily at a cost exceeding Rs 2,655 crore annually, which traces its roots to the Justice Party era before being expanded by K Kamaraj and later transformed by MGR into the Nutritious Noon Meal Scheme. Successive governments have rarely dismantled popular schemes. Instead, they rename, recalibrate, and politically rebrand them.
The Amma Unavagam canteens launched by Jayalalithaa illustrate this clearly. When the DMK came to power in 2021, the scheme was not abolished outright because the political cost would have been too high. Instead, it gradually deteriorated through underfunding and administrative neglect.
The free laptop scheme tells a similar story. Launched by Jayalalithaa in 2011, it was among the first programmes of its kind in India. Yet with the 2026 elections approaching, the government revived it under a different name – Ulagam Ungal Kaiyil. The same tension is now visible in the Kalaignar Magalir Urimai Thogai scheme. While the TVK government has assured beneficiaries that the Rs 1,000 monthly assistance will continue, it has also said the programme requires restructuring. Closely associated with the previous DMK government, the scheme illustrates how welfare in Tamil Nadu is rarely withdrawn outright, but often reshaped through changing political and fiscal priorities. Tamil Nadu’s outstanding liabilities exceed Rs 9.56 lakh crore, among the highest in the country.
Research indicates a sharp deterioration in the State’s fiscal health over the past decade. Its debt-to-GDP ratio exceeds 30%, crossing 35% when State guarantees are included, despite the Fiscal Responsibility Act, 2003, prescribing a 25% limit until FY2015 with a planned decline thereafter.
This creates a difficult governance question. In a State with outstanding liabilities exceeding Rs 9.56 lakh crore — among the highest in the country according to RBI data, and an expanding welfare architecture that now includes promises such as monthly stipends for women and subsidised LPG cylinders, what institutional mechanism prevents welfare from turning into permanent expenditure without evaluation? This is where India’s policy discourse urgently needs to consider the idea of sunset clauses, a policy mechanism through which a scheme automatically comes up for review after a fixed period unless formally renewed following evaluation.
The principle is simple: no programme should continue indefinitely without periodic assessment of whether it is achieving its intended outcomes.
Increasingly, institutions financing state development are also demanding measurable outcomes rather than perpetual expenditure. The Asian Development Bank alone has committed nearly $59.5 billion cumulatively to India as of December 2024, with Tamil Nadu emerging as one of its major state-level partners in urban infrastructure, roads, water supply, and social sector projects.
Both the ADB and the World Bank have steadily moved toward results-oriented lending frameworks that prioritise monitoring, evaluation, and demonstrable policy impact. States that institutionalise periodic review mechanisms are likely to be better positioned to secure long-term development financing in an era where accountability is becoming central to public expenditure.
First, sunset clauses address the political ownership problem. Welfare schemes in Tamil Nadu often become associated with individual leaders or party identities rather than public outcomes. This creates incentives for successor governments to weaken or rename inherited programmes regardless of performance.
Second, sunset clauses improve fiscal discipline. Tamil Nadu’s welfare commitments have expanded steadily across governments, but there is no comparable institutional mechanism to retire schemes that have outlived their utility or suffered implementation fatigue. Economists have repeatedly argued that India’s governance challenge is not merely about spending more, but spending better. The State has expanded its ambitions faster than its delivery capacity. The OECD recommends that earmarked welfare spending be subject to "systematic and periodic spending reviews and outcome evaluation, possibly accompanied by sunset clauses, to ensure accountability and spending efficiency".
Third, sunset clauses improve institutional credibility. As multilateral financing increasingly emphasises measurable outcomes, states that demonstrate rigorous evaluation frameworks are likely to enjoy greater policy credibility.
Tamil Nadu now has an opportunity to lead this conversation nationally. A new government without a long legacy of inherited welfare branding is uniquely positioned to propose a sunset review framework without it being interpreted as an attack on any specific scheme. The promised white paper on the State’s finances could become more than a political audit of the previous administration. It could become a governance commitment about how welfare itself should function in the future.
Requiring every major welfare scheme to undergo a structured five-year review is not a retreat from social justice or welfare ambition. It is the strongest possible signal that welfare programmes are intended to deliver measurable public value rather than simply electoral advantage. Tamil Nadu has led India before — in school meals, healthcare interventions, and women’s self-help group mobilisation. It now has the opportunity to lead again, not merely in the scale of welfare promises, but in the seriousness with which those promises are evaluated.
The treasury may be empty. But the argument for accountability never is.
Keerthi Nathan is a Consultant with a Multilateral Development Bank; Atul Raman is a Researcher with a Public Policy Think Tank
(Views expressed are personal)