Jayalalithaa dead: How her policies made Tamil Nadu a successful welfare state with a difference

Tamil Nadu is a state with a very rich cultural heritage typified by Carnatic music and Bharatnatyam. The same has been reflected in the economy too and the state has been one of the forerunners in economic growth and development for the last two decades irrespective of the government in power. Ms Jayalalithaa ((her name is sometimes spelled Jayalalitha) had continued to take the state on the upward path and hence her demise means not so much ‘an unfinished agenda’ but ‘further acceleration’ in the economic prospects.

Tamil Nadu leads the country in terms of having the second highest per capita product across all larger states coming just slightly below Maharashtra. It has the third highest number of bank branches after Maharashtra and Uttar Pradesh and also in outstanding credit where Maharashtra and Delhi are higher. In terms of bank deposits it ranks fourth. Quite clearly TN has the infrastructure for growth. In the social development tables, TN is above the nation’s average in terms of life expectancy and literacy and has the second lowest infant mortality rate.

Ms Jayalalithaa’s economic legacy will be more remembered in terms of what the government did for the alleviation of the poor, which has also been questioned by critics as being ‘populist’. The schemes introduced over the years have focused on providing direct assistance to the weaker sections in terms of various projects as well as distribution of physical goods. Hence, there has been a direct attack on the problems that affect the lower income groups which has become effective over the years.

The interesting part of these schemes across the board is that they have been identified with her personality with a prefix of ‘Amma’, which hence has helped to drive home the point that it was the person that mattered. This is still not too unusual considering that even other states and the centre have used names of icons with these social programmes. The difference is that they have been associated with her name. Hence cradles for babies, gold for girls getting married, subsidized meals at Rs 1, free water to households, subsidized bottled water, free power of 100 units per month and so on were schemes which directly affected the well-being of the poor.

A significant aspect of some of these schemes is the implementation which has been stupendous like the mid-day meal programmes which has almost forced parents to send their children to schools for the meal and also thus ensuring that they get educated in the process. This has worked specially for girls in rural India where there are still taboos relating to gender education.

The other set of policies involved would hinge on what would loosely be called freebies, which has come to typify the habit in several other states too. Distribution of laptops, sarees, sewing machines, grinders and mixers, seeds, mobile phones, subsidized cement, and salt for the poorer sections are measures that have been taken to directly reach out to the poor. While some of these state-sponsored gifts add to the productive capacity of the people, others are household conveniences that appeal also to the political decisions taken at the time of elections.

Now how would one evaluate such largesse? For the orthodox economist, such expenses would be termed as being ‘populist and wasteful’ and will not get the approval. Further, it is argued that such programmes tend to put substantial pressure on budget balances as these outlays are considered to be of the non-development variety. The TN government has, however, always argued that these expenses have to be borne as they were part of the elections promises that have to be implemented. Besides, such expenditure created demand for the respective industries. Further, with the budgetary numbers reading okay, there was little reason, it has been argued, for critics to get into the quality of the expenditure. Also, the fact that the state is one of the better performing ones vindicates the stance that the money could have been put to alternative uses.

The policies in TN have raised a wider debate about whether or not it is right to ‘peer down’ the numbers of the budget when the overall contours are being maintained. Governments have to spend where others do not, and while some states have worked on the industrialization route to ensure that the trickle down effects work, the direction has been different here where direct action has been taken. TN would probably go down as one of the few successful welfare states in the country which has made a difference.

What lies ahead now for the state? First, the state has to go in for drastic power reforms as the DISCOMs need to be revamped and their operations realigned with those of other states as the present losses are not sustainable. This does call for radical changes in the tariff structures and measures taken to cut down on T & D losses. Second, while TN is a better industrialized state, it still lags others when it comes to ease of doing business. The latest study carried out by the government with World Bank reveals that TN comes in the second category of ‘acceleration required’ and is not in the top 10. This is where the government should work on because states are getting progressively competitive and would attract larger quantities of investment in case the environment is not cleaned up.

Hence the focus should now be more on higher growth enabling policies while continuing with social enhancement schemes so that the state remains high on the radar. Given that there has been continuity in the latter, it may be expected that the government will work on the former in the coming months.

(The writer is chief economist, CARE Ratings. Views are personal)