Jayalalithaa dead: How Amma’s populist policies left a debt bomb ticking in TN

The word, ‘Amma’ (mother) is used six times in Tamil Nadu’s 2016-17 budget document, presented by finance minister O Panneerselvam on 21 July, the adjective Puratchi Thalaivi is used once and references to ‘chief minister’ 31 times.

Just like the verses of scriptures typically begins with a prayer to the cosmic force, Panneerselvam, appears to offer prayers to the AIADMK supreme leader often in the budget speech, thus making the whole 86 page budget document a humble submission at the feet of his and his party men’s supreme ‘mother’.

A quick glance through Panneerselvam’s 2016-17 budget document reaffirms Jayalalithaa’s iconic, cult status. Terms like, “unparalleled”, “unflinching” “historic”, “infinite love”, “affection” are used to describe Mother Jayalalithaa, who died on Monday night at Apollo hospital in Chennai, while serving her sixth term as the chief minister.

Perhaps, in these times, there is no other Indian state as TN where political leaders enjoy blind devotion of their followers, mostly the poor strata of the society. For most part of her life, Jayalalithaa carried the stature of a demigod, first as an actress and later as a politician, universally admired by her followers as ‘mother’, before whom they never shy to prostrate. For them she was never human.

Most of the social welfare schemes in TN are named after her – ‘Tamil Nadu Village Habitation Improvement’ (THAI) scheme (‘Thai’ in tamil means mother), “Amma Unavagam” (subsidised food), Amma Kudineer (drinking water scheme), Amma laptops, ‘Amma Baby Care Kit’,‘Amma Magapperu Sanjeevi’ and ‘Amma Arogiya Thittam’. There are a number of such schemes that carry her name. People adore those products/services as mother’s blessings, thus melting the thin line between political populism and insane, often blind personality-driven politics.

The populist bandwagon

How did Jayalalithaa win the hearts of poor? To say the least, she was also the ‘mother’ of all freebie schemes that ensured the support of middle and lower-income class in multiple areas. To be sure, some of these were transformative in nature in the areas of education, housing and aiding small entrepreneurs.

Certain examples include the World Bank-aided ‘Pudhu Vaazhvu Project launched in 2005.  Under this scheme, which the government claims to have given job-oriented skill training to 3.27 lakh youth. The THAI scheme, so far implemented in 71,126 habitations pertaining to 9,511 village panchayats and the housing scheme under which in the last four years, the Tamil Nadu Housing Board has constructed 10,059 units at a cost of Rs 565.92 crore, including 2,293 houses for the low income group.

‘Amma’ is also known for her investor-friendly approach, which explains the reason why the state is home to more industries and employment than any other Indian state, according to IndiaSpend research. TN is also home to a small-sector movement with the Micro, Small and Medium Enterprises (MSME) sector providing employment to 63.18 lakh persons.

No doubt. Jayalalithaa has been an able administrator. This is evident from the progress made by the state in the areas of poverty eradication, social welfare, investor-friendly measures and overall economic numbers. TN’s Gross State Domestic Product (GSDP), which fell to 3.4 percent in real terms, during 2012-13, was reversed to 7.3 percent towards 2013-14 – higher than the national average growth rate of 4.7 percent of that period.

The state recorded a GSDP growth rate of 8.8 percent in 2015-16 as against the country’s Gross Domestic Product (GDP) growth rate of 7.6 percent, based on the 2011-12 constant prices. The gross fixed capital formation, which indicates the investment activity too has improved significantly, touching Rs 34,091 crore in the fiscal year 2014 compared with Rs 23,054 crore when her predecessor, M Karunanidhi left office in 2010-11.

A TN debt-bomb in making?

But, in the process of rolling out freebies, she also built a debt bomb for the state. At this point, TN’s debt is over Rs 2 lakh crore. But, according to an IndiaSpend analysis, TN’s debt has witnessed a 92 percent increase over five years ending 2015. According to the Reserve Bank data, TN registered the highest gross fiscal deficit among all states in 2015-16 at Rs 31,830 crore. For current fiscal the TN government pegged its fiscal deficit at Rs 40,534 crore or  2.96 of GSDP.

In the last five years, when Jayalalithaa was in office, the debt level of Tamil Nadu has risen 105 percent from Rs 1.14 lakh crore to Rs 2.35 lakh crore. This is the sharpest increase in debt levels by a large state.

Of all Indian states, only Haryana has beaten TN with a 141 percent rise in public debt. It is needless to say most of this debt is the consequence of Jayalalithaa’s populist bandwagon aiming at the poor of the state. Other large industrial states like Maharashtra and Gujarat have seen their debt level increasing by a relatively better 64.5 percent and 60.3 percent in the same period.

There is no impressive trend in tax revenue correspondingly. According to 2016-17 TN budget, the tax revenue is estimated to increase to Rs 90,691.87 crore in revised budget estimates for 2016-2017 from Rs.86,537.70 crore as per the revised estimates 2015-2016.

For TN, ‘Amma’ leaves an era of political populism and a debt bomb in making. Amma’s presence will still be felt in the TN cabinet meetings through her image and the memories of her charismatic leadership. But, the task of dealing with the debt bomb in making is up to her trusted lieutenant O Panneerselvam and his AIADMK colleagues.

(Kishor Kadam contributed to this story)