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        State budgets don't really get the scrutiny or focus as does the Central one does. For one, State governments are caught in a financial cleft stick, having very little federal freedom to come up with impacting policy decisions. Most State budgets, in the event, tend to be populist exercises with Central grant passed out for doles of various departments. It is mostly passing things from one hand to another. This has been the case for long, and the Tamilnadu budget for 2007-08, unveiled today by Finance Minister K Anbhazagan, is no exception to this generic rule.

        The budget reinforces the populist tradition and also continues in line with the frenzied 'free' supply of the DMK government. Anbhazagan, if anything, has stretched the plate to include housewives and students. Hitherto, the freebies were aimed at the rural poor and the farming community, but this budget has also targetted the other segments of the society. For instance, undergraduate students studying in government arts colleges would be exempted from tuition fees, thereby extending free education to them to college level. Reflecting the populist mindset, the budget also seeks to provide a six per cent hike in the Dearness Allowance for government employees from 1 January, restoration of Leave Travel Concessions and a hike in the festival advance from Rs 1,000 to Rs 2,000.

        But apart from the free offers, the focus is on the VAT (value added tax). The Tamilnadu business and trading community has slowly come to grips with VAT. But it is the government that seems to have tied itself in some confusing knots by offering exemption from the VAT to certain commodities. Kerosene pressure stoves, fertilizer mixture made out of chemical fertilizers, seeds for sowing purposes, pencils, ball pens, ink, pillow covers, bedsheets and towels, notebooks, geometry boxes, refined oil, used by households on a largescale have been exempted from VAT.

        VAT has also been reduced from 12.5 per cent to four per cent on unbranded coffee powder, masala powders, unbranded ghee, plastic goods, audio cassettes, school bags and used cars. There is very little by way of explanation for the rationale for this exemption. The imposition of a four per cent tax on some items used by the industry would be bitter news for the trading community. The question that this cess raises is whether the State government's coffers are running dry what with the seemingly never-ending slew of sops.

        The budget naturally cannot be expected to provide answers to such a query. But the budget shows an uncovered overall deficit of Rs 3.75 crore, a revenue deficit of Rs 101.38 crore and a total fiscal deficit of Rs 7,800.56 crore. But to be fair to Anbhazagan, he has not done anything that is overly disappointing. A populist budget from a government that has been populist right from day one.