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Why no MEGA Central investments in Dravidian Party rule?

What cordial Centre-state relations can do is best exemplified by the flow of mega investments in public sector projects. Tamil Nadu benefited immensely through these in the 1950s and 1960s. The Integral Coach Factory, Neyveli Lignite Corporation, BHEL (Tiruchi, Ranipet and Pudukottai), Heavy Vehicles Factory, Chennai Petrochemicals, Madras Fertilizers... have brought significant investments, employment and skills apart from substantial tax revenues to the state. Such investments have been missing during the long rule of the Dravidian parties. Contrast this with the recent spurt of big ticket public sector investments by NDAII in other states.

Why no MEGA  Central investments  in Dravidian Party rule?

Leaders  of Tamil Nadu rarely felt it necessary to interact regularly with business leaders enquiring about their problems and offering solutions. 


The state spends a lot of its energies on small-sized projects with emotional/voter appeal like Amma Salt, Amma Cement and now Amma petrol stations! 


Look at the contrast provided by Narendra Modi as chief minister of Gujarat and Chandrababu Naidu of Andhra Pradesh. Both visit foreign countries frequently, interact with prospective investors and their state diaspora. 

Mega PSU investments in other states

LOOK AT THE size of investments recently announced in a few states:

•   State-owned oil firms IOC, BPCL and HPC signed an agreement to set up jointly the world’s largest refinery and petrochemical complex with a refining capacity of 60 MMTPA at Ratnagiri, Maharashtra, at a cost of Rs 260,000 crore. This will fulfill the future fuel demand and the export potential of the country.

•             On 7 March 2017 Prime Minister Narendra Modi dedicated to the nation ONGC Petro Additions Ltd, a petrochemical complex at Dahej, Gujarat, built at a cost of Rs 30,000 crore. This is a joint venture promoted by ONGC, GAIL and GSPC. This petrochemical plant can produce 14 lakh tonnes of polymers annually

•             The high-speed rail track between Ahmedabad and Mumbai has been cleared by the Railways at a cost of Rs. 98,000 crore. Railways have also cleared for the Mumbai suburban railways an investment of Rs. 54,000 crore for constructing an elevated suburban rail system over the existing tracks the dedicated freight corridors linking Delhi with Mumbai and Amritsar with Kolkata which together may involve an outlay of Rs 100,000 crore.

•             The 2539 km ‘Urja Ganga’ gas pipeline project of GAIL to be built at an investment of Rs 12,940 crore, passes through five states (UP, Bihar, Jharkhand, Odisha and West Bengal) that would benefit 40 districts with piped gas. This project will also be used to supply gas to three fertilizer plants which are expected to bring investments of Rs.51,000 crore.

•             To revive sick fertilizer units, RCF has signed an MoU with Coal India Ltd (CIL), GAIL and FCIL to set up a coal-based fertilizer plant at Talcher.  The 3850 MTPD urea and 2200 MTPD ammonia plant will cost of around Rs.7700 crore.

•             Reliance Industries spent Rs.60,000 crore on its Jamnagar refineries. Another Rs.126,000 crore is being invested on a petro-chemical complex.

•             Reliance Industries, in collaboration with BP Plc, has announced $ 6 billion (Rs.40,000 crore) investment to develop their gas fields in the KG Basin off Andhra coast. RIL has already invested around $ 9 billion in developing off-shore gas production in the KG Basin.

These are in addition to large scale investments made by private companies in the power and telecom sectors.

In contrast, except for the Kudankulam nuclear power plant built with Russian assistance, there has not been substantial investments in Tamil Nadu. Even in the case of Kudankulam that took nearly 16 years for construction, the project received little support from the state government. The promised supply of water from the Thamirabarani River was not provided. Nuclear expert Dr M R Iyer points to the risk of depending wholly on desalinated water which can fail in the event of a disaster. The AIADMK government also did not act in time to curb the agitation led by Udayakumar and several NGOs receiving support from several foreign vested interests.

The massive investments made on the project suffered grievously by delayed construction caused by a mismatch in supplies, deterioration of equipment stored due to the long construction phase and also due to the apathy of the state government. Jayalalithaa acted firmly only after experiencing the havoc caused by a severe shortage of power in Tamil Nadu in 2012 when most parts of the state suffered power cuts of over 14 hours a day.

 

They treated PSUs alien...

Both the DMK and the AIADMK have been indifferent in attracting significant Central investments. They  treated the PSUs as alien and didn’t evince much interest in their expansion. In the 1950s and 1960s under the Congress rule, Tamil Nadu did attract handsome investments in the public sector: the Integral Coach Factory, Neyveli Lignite Corporation, BHEL and the Heavy Vehicles Factory involved substantial investments, contemporary technologies and large-scale employment. These made a rich contribution through imparting skills, managerial capabilities as also provided jobs and revenues to the state. Look at the massive contribution of NLC to rural electrification of the state and to expanding agriculture, till then the preserve of the Thanjavur and the southern districts, to the northern districts! At the massive contribution of BHEL in elevating Tiruchi as a prized town for engineering -  forging, fabrication, welding and other forms of metal forming - supporting hundreds of ancillary industries and for Tiruchi emerging a leading centre for combustion engineering, wind turbines...

For 50 years from 1967, the Tamil Nadu government was headed by popular figures from the film industry who had little exposure to state-of-the-art developments in infrastructure, industry, governance and other fields. Significantly C N Annadurai, M Karunanidhi, MGR and Jayalalithaa rarely exerted to visit foreign countries which should have opened them up to development issues. They also felt comfortable mostly meeting their friends and admirers and chamchas from the film industry and party men. Remember the long hours Karunanidhi spent with his admirers on numerous television events that were singing his paeans?

 

Poor, indifferent relations with  business leaders...

These leaders rarely felt it necessary to interact regularly with business leaders enquiring about their problems and offering solutions. Just look at the contrast provided by Narendra Modi as chief minister of Gujarat and Chandrababu Naidu of Andhra Pradesh. Both visit foreign countries frequently, interact with prospective investors and their state diaspora. In his recent trip to the US, Naidu met with the rich Andhra NRIs in the US and solicited their involvement in the state’s development. Ravindra Sannareddy (Sri City) and Ramachandra Galla (Amara Raja Batteries) are just a couple of NRIs who responded readily. The large presence of Andhras in Microsoft also helped  this IT giant followed by several other large IT companies setting shops in Hyderabad due to the marketing manoeuvres of Naidu. He also hobnobbed with global leaders at the Davos Economic Forum meetings.

While other states like West Bengal fielded well-educated and articulate professionals as Central and state ministers, Tamil Nadu opted to appoint for these political or family members. Son of DMK supremo M Karunanidhi, M K Alagiri,with little experience in administration, Jagadrakshakan who crossed over to DMK in time to contest the elections and won, Rabi Barnard who was a TV anchor and hardly any of the 37 elected MPs of AIADMK made a mark in the Parliament. These, selected purely on the loyalty factor or family connections, have been allowed to enrich themselves.

 

End the adversarial stance...

In the case of the AIADMK, the issue was confounded by the twin stances: Jayalalithaa had an innate hostility to the Centre due to the 15-year long participation of the DMK in the Central cabinet. This was further confounded by her perceived belief that the DMK ministers of the Centre like T R Baalu and A Raja had already milked the Central projects denying her the opportunity. This resulted in her stalling several Central projects like the elevated highway project connecting the Chennai and Ennore ports, the gas pipeline project causing substantial loss of investments and revenues to the state. Sadly, the bureaucracy, known for its efficiency silently fell in line.

The ability to build a strong vote bank and the unquestioned leadership of the party led

Jayalalithaa to treat Central leaders with disdain. Particularly saddening was the disrespect she showed to Dr. Manmohan Singh. Apart from being hyper-critical of the Centre’s policies during the 2001-06 regime, she even avoided receiving him at the airport by opting to move out of the city on other engagements.

 

I met Dr Singh at his Race Course Road office on 19 November 2005 and explained a plan to demonstrate improved agri-productivity techniques and invited him to launch this. He enquired whether it is in Tamil Nadu and I could feel his discomfort. He deputed M S Ahluwalia for the demonstration at Padappai on 10 January 2006. His personal secretary,  also hinted at his discomfort in visiting Chennai.

Even during 2011-16 when Jayalalithaa was the chief minister, such an attitude persisted. Look at the visits of the prime ministers to the opposition-ruled Bengaluru or Kochi to launch major projects but not Tamil Nadu.

This attitude arose from Jayalalilthaa’s belief on regional party leaders gaining power in Delhi decimating national parties. Sadly this attitude has not changed even after the BJP emerged as aparty with a majority in the LokSabha and assuming power in 2014.

 

Few,modest investments...

In TN there has been a concentration of medium-sized enterprises with revenues up to Rs.3000 crore. At the best of times, business enterprises in Tamil Nadu have been making modest investments on marginal expansions in Tamil Nadu. Except for large-sized automobile companies and their vendors, large initial investments were rare. The state lacks large-sized consumer production units. The IT sector doesn’t involve continuous investments. The areas that call for large investments relate to oil refining, petrochemicals, fertilizers, power, drug and pharma units... TN lacks these.

 

Poor focus on port development...

Large investments would also call for the development of port infrastructure in a big way. Gujarat again provides a shining example. 41 minor ports littered along the coast are thriving private enterprises that feed large number of industries.

                Tamil Nadu, which has a long coast line, did not focus on a similar development. The concentration of three major ports near the metro – at Chennai, Kattupalli and Ennore - compete for the  limited custom. Chennai Port, right in the heart of metro, is on the path of decay and should plan for merging with Ennore Port and close down its operations. One sees  little development at other minor ports along the long coastline that fall under the jurisdiction of the state government.

The long tenure of T R Baalu and G K Vasan as Central ministers of shipping and ports had little impact on port development or shipping. Baalu ensured berths for his partymen in the ports’ boards, and Vasan was content in changing the name of the Ennore Port to Kamarajar Port. Happily, one sees today a lot of dynamism in surface transport minister Nitin Gadkari focusing on coastal shipping and port development. The state would do well to set up a think-tank on port development over the short and long terms. Just think of a fast ferry service between Chennai and Mamallapuram!

The state spends a lot of its energies on small-sized projects with emotional/voter appeal like Amma Salt, Amma Cement, now Amma petrol stations, with little purpose except benefitting a few partymen to win dealerships. This was an old game practised by the Congress and NDA regimes to reward partymen with petroleum dealerships. Why revert to this practice?

 

Encourage Central public sector to invest...

At a time when investments from the private sector are small, the Centre has opted to stimulate such investments through the public sector. The state leadership, with its present closer ties with the Centre, should endeavour to win such investments. Like Telangana, Andhra Pradesh and Karnataka it could involve BHEL in constructing large capacity thermal power plants in the state. Looking at the tremendous potential for large investments in gas-based industries, it should help resume construction of the gas pipeline through the western parts of Tamil Nadu linking Kochi with Bengaluru. Simultaneously it should work for a share of gas production in the KG basin and ensure construction of a pipeline from Kakinada to Chennai and Bengaluru and Chennai-Tuticorin as originally planned.

 

Strong economic liaison work at Delhi

Chief Minister Palanisamy would do well to emulate AP’s Chandrababu Naidu in setting up an active liaison cum lobbying network in Delhi. This should include officers of the Tamil Nadu cadre working in Delhi, ministers and MPs from the state, business leaders... The politician-representative at Tamil Nadu House, Delhi,  is chosen largely on the loyalty factor and not so much for his capabilities to interact with Central leaders. The inaccessibility of AIADMK supremo Jayalalithaa also came in the way of close interactions with Central leaders; she rarely met Central ministers and her rare visits to Delhi for participation in NDC and other meetings were marked by her confrontationist approach.

The state leadership would do well to form a strong think tank that would include brilliant leaders from the state to advise on development issues. A change in attitude is needed in the light of the absence of charismatic leaders who could get votes with ease irrespective of the record of economic development. Recent elections across the nation have been pointing to the importance of performance and delivery of the Central and state governments for winning elections.

For fifty years there had been an emphasis on populist measures that focused on mass appeal to voters through subsidies and freebies. Many of these were not targeted on the most deserving sections: eg. universal PDS or subsidised domestic gas. With the finances of the state not in great shape and with large chunks of revenues lost on the shrinking liquor business, the state has to look rationally at revenue expenditure which is dominated by salaries and pensions to government employees, subsidies and debt servicing. This is not sustainable and income generation through a buoyant economy focused on growth is the imperative. For this, the state would do well to improve its relations with the Centre and work towards attracting more investments.

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