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Tasks for the new government

Since 1967, political parties of the state have been limiting their sights to the next elections. They had chosen to live from election to election. Vision Tamil Nadu 2023 set the sights over the long term.

Tasks for  the new government

The over emphasis on welfare through free distribution of goods and services has understandably left little resources for capital expenditure. Deficit budgets and the modest size of development expenditure came in the way of long-term growth.

In 2012, chief minister Jayalalithaa announced the Vision Tamil Nadu 2023. Jayalalithaa spoke of taking per capita income to  Rs 450,000 in 2023, six times the then level. The ambitious document that envisages annual economic growth of 11 per cent per annum, called for  consistent generation of handsome revenue surpluses to invest in infrastructure and industry.

Here are some of the issues that needs to be tackled to realise the vision.


Relations with Centre....

At the start of the AIADMK regime in 2011, there were two major issues: one related to Sri Lankan Tamils. The Rajapakse government decimating the LTTE caused humongous loss of lives and human suffering. These became a platform for all political parties of Tamil Nadu to voice their concern for strong action. They were unanimous in condemning the excesses of the Sri Lankan Army and its occupation of the Tamil majority north and east Sri Lanka. The approaches of the UPA government and that of the state vis-à-vis Sri Lanka differed. There were also constant irritations caused by fishermen from Tamil Nadu transgressing the international waters and landing in trouble. This had been an emotive issue, which subsided after the Rajapakse’s party was defeated in the subsequent elections.

A larger concern on the economic front was the long delay in the construction of Kudankulam Nuclear Power Plant and stalling work by a section of the local people. Initially, the AIADMK government kept aloof; but once the elections to the local bodies were over with AIADMK returning with handsome success, the government took a firm stand to end the long blockade.  Of course, the precarious power position in one way helped.

Sadly, the DMK, which had been part of the Central government for 15 long years, had not bothered overmuch to leverage that great advantage.

 

The 37 Lok Sabha MPs can help...

 

With its large contingent of 37 MPs in the Lok Sabha, Tamil Nadu could have leveraged this strength to build several vital projects. But the tenure of AIADMK has been marked by the lack of cordial and coordinated work with the Centre on several economic issues. Central projects relating to highways, gas pipeline, coal-bed methane... have been stalled. The state and the Centre got locked in court cases causing massive delays and consequent losses. The opposition to several of the Central projects involving substantial investments, has harmed the interests of Tamil Nadu.  I cite a few:

The state government stalled work on the gas pipeline connecting Kochi with Bangalore via the seven western districts of Tamil Nadu on grounds of opposition from around 1500 far-

mers. Providing access to the precious resource of gas would have benefited around 170 lakh of the state’s population of the seven districts. The state also did not pursue the contract given to Reliance Industries to connect Kakinada-Chennai-Tuticorin and Chennai-Bengaluru sections, which would have provided access to gas by large parts of southern and western Tamil Nadu. Sadly, the state has been missing to tap the immense potential of natural gas as feedstock and fuel for a large number of industries like fertiliser and power,  for transport and domestic use. Much of the prosperity of Gujarat has been built on gas.

 

Lack of continuity in policies and projects

 

The opposition to work done by the previous DMK government has resulted in stalling several projects cleared earlier. The elevated road connecting Chennai and Ennore ports was a big casualty. This National Highways Authority of India (NHAI) project conceived to provide a lot of relief from congestion and easy vehicle movement had got stuck for years. The contractor has claimed massive damages. As in the case of GAIL, one witnesses the state proceeding against another prestigious Central undertaking with law suits.

Opposition from a few farmers again stalled the coal-bed methane project decided upon earlier.

Several power projects like the Ultra Mega Power Project at Cheyyar and the Udangudi plant to be set up along with BHEL are still non-starters.

Remember, these projects involving huge outlays were cleared after elaborate studies. Delaying these cost humongous losses apart from denying benefits to the citizens. In any democratic polity, continuity of projects cleared is of paramount importance.


A sunrise industry allowed to sunset

From the state’s earlier pre-occupation with the automobile industry, there was a welcome focus on the electronics industry. There was great promise over the state focusing on the information technology and telecom sectors with the much-needed focus on hardware. Nokia, Foxconn, Ericsson, and Dell Computers surfaced in quick time and Sriperumbudur earned fame for these industries. Employment recorded an explosive growth. There was enrichment of skills and prosperity.

The state could have worked with the Centre to save Nokia and Foxconn, but made its own tax demands, did not arrest the deterioration in industrial relations that resulted in the closure of these plants. The enthusiasm on the part of Taiwan and South Korea to set up industrial units in the state waned and a great opportunity for the state emerging strongly in electronics hardware was lost.


Delhi is distant...

One finds poor presence of the state in the national seminars organised by industry associations like CII. I have witnessed chief ministers Sheila Dixit from Delhi, Narendra Modi from Gujarat, Chandrababu Naidu from Andhra Pradesh, Mamata Banerjee from West Bengal, Shivraj Singh Chauhan from Madhya Pradesh and even Raghubar Das from Jharkhand participating and making strong cases for investments in their respective states. Neither the Tamil Nadu leader nor even its prized bureaucrats are seen in such meetings.

You can extend this to the total absence of the state’s point of view in the national television presentations. Sadly both the DMK and the AIADMK have not been rearing competent second and third line leaders to represent the state effectively. I also notice a lack of interest to seek such expertise from outside. Look at the ease with which Bihar’s Nitish Kumar seconds Pavan Kumar Varma, IFS (Retd), Punjab’s Parkash Singh Badal deputes Naresh Gujral or West Bengal’s Mamata Banerjee placing Derek O’ Brien in national debates to great effect.

Five decades ago, in 1966-67, DMK leader

C N Annadurai announced three measures of rice (around 4.8 kg for a rupee) as his major election platform. This was so effective that it catapulted the DMK to power. In successive elections the parties have expanded on such welfare schemes: AIADMK under MGR introduced the noon-meal scheme that provided one square meal free to over 80 lakh school students and destitutes. Over the next decade, freebies expanded to free uniforms, free textbooks, free shoes, free dhotis, saris...

In 1989, the DMK, by then kept out of power for 13 long years, offered free electricity to farmers. Starting with a modest Rs 200 crore, this subsidy has snowballed today to over Rs 4000 crore. With that the  competition for populism intensified with DMK offering free colour TVs; the AIADMK went one step up providing fans, mixies, grinders and laptops free for students. All political parties in the state strive hard to further expand this list.

There is a huge cost for all this. Such welfare measures form over a fifth of the state’s total revenue expenditure. Add to this another fifth on servicing the state’s public debt that exceeds Rs 200,000 crore. Finally, close to 50 per cent of revenue expenditure is accounted by salaries and pensions on the huge workforce of over 13 lakh.


We serve Chinese business very well!

I refer to a strange feature.  One legitimately expects the thousands of crores of rupees spent on providing freebies to benefit industrial units in the state  resulting in larger employment. The state has no dearth of units manufacturing these products. Curiously, under the government scheme of procuring things in volume at the lowest price and in quick time, local manufacturers do not find producing these viable. Again, such one-time orders would not also enthuse them to invest in increasing capacity in quick time. How we have been benefiting Chinese manufacturers!

In the absence of quickly enforceable warranties, the beneficiaries are loaded with low-quality goods of unsustainable performance.


Positive features...

The state has a strong social infrastructure in the form of education and healthcare. With 600-odd engineering colleges, a large number of science, arts, commerce, science, management and agricultural colleges, nurses training institutes and para-medical institutions spread across the state, there is a copious supply of educated manpower. This explains the huge growth of sectors like automobiles and information technology.  

Along with this, the state has been doing pioneering work in setting up corporate medical hospitals that have cumulatively won for the state the reputation as the healthcare hub of India. The state’s Comprehensive Health Insurance Scheme provides free medical and surgical treatment in government and private hospitals to the members of any family whose annual family income is less than Rs 72,000. Under the scheme, the sum assured for each household is Rs 1 lakh every year for four years for a total value of Rs 4 lakh. Over 100,000 surgeries have already been performed under this scheme. This has been a hugely beneficial and popular health insurance scheme benefiting over four crore people of the state.

The state like Gujarat, with a long coastline and having three major ports and a large private port, can leverage this great advantage,. This is quite disappointing in the light of the DMK and the Congress having held continuously the post of Union Minister for Ports and Shipping for over a decade. The 41 minor ports dotting the coastline of Gujarat are flourishing hubs of international trade and commerce. Tamil Nadu ports have been sluggish in reducing the turnaround time of ships. Tiny Sri Lanka and tinier Singapore and Dubai with large port facilities, tranship consignments to Indian ports on the east coast to great profit. Tamil Nadu can emulate this to step up trade. Just look at the flourishing exports of automobiles and auto components!


The new Tamil Nadu

Jayalalithaa, an expert in understanding the value of welfare measures, this time planned the timing for announcing these so well.  She waited for the other parties to show up their hands, massively improved upon these and gave just ten days for other political parties to scramble any counter offer! Obviously they couldn’t.

The basket of goodies seems bountiful and targets to reach much larger sections of the population, especially women: these include a 50 per cent subsidy on mopeds and scooties bought by women, a hike in maternity assistance to Rs 18,000 and 8 grams gold (at present 4g) under the marriage assistance scheme.

The goodies are to be distributed to all age groups, left, right and centre.

The cost of subsidies offered has been variously estimated from Rs 30,000 crore a year to Rs 1.14 lakh crore. Add to this, the reluctance to adjust tariff to increases in input costs. The universal demand for prohibition that could ultimately result in a huge revenue loss and the impact of implementing the 7th pay commission recommendations (estimated to cost around Rs 15,000 crore per annum), the picture of the pressure on state’s finances  is complete.

The state’s Vision of 2023 will call for serious efforts to increase revenues and step up investments. With the comfortable majority and the loyalty she commands among large sections of the state, Jayalalithaa can be expected to strive for strident growth.

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