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Tamil Nadu: Jayalalitha Strikes Back

Secretary Clinton and Tamil Nadu Chief Minister Javalaithaa Shake Hands

Tamil Nadu is widely (and correctly) regarded as laid-back, affluent, literate and peaceful. That is, until it comes to politics. In fact, no state beats Tamil Nadu for sensational, flamboyant and cinematic political battles.

If a movie were to be made about today’s politics in Tamil Nadu, it might be called:" Star Wars III: Jayalalitha Strikes Back."

Film-star turned politician, J. Jayalalitha was voted back in to the job a year ago for her third turn at the job. She thumped her arch-rival M. Karunanidhi — himself a former film star and producer and a five-time Chief Minister.  Star Wars, indeed.

Jayalalitha rode the wave of public outrage at the enormous 2G scandal that has rocked all of India.[1] Karunanidhi’s DMK party and his family were at the core of the scandal. India’s telecommunications minister, A Raja—a Tamil and DMK stalwart—was arrested in 2010, allegedly for overseeing a rigged 2G spectrum auction. The winning bids came in almost $40 billion below fair market value. Karunanidhi’s own daughter was also charged, and spent six months behind bars. Both are awaiting trial. The Congress Party in Delhi was rocked by the scandal, appearing to tolerate the corruption of a key coalition partner.

Jayalalitha swept into power, and has focused on sweeping out all vestiges of DMK rule. Her first target was the newly constructed state legislative assembly and government building. Karunanidhi had built the modernist $200 million capital in the middle of a faded yet bustling downtown Chennai. He’d rushed to open the office complex before the 2011 state elections. Prime Minister Manmohan Singh and Congress Party chief Sonia Gandhi had both flown to Chennai for the ribbon cutting.

Jayalalitha took pleasure not only in defeating Karunanidhi, but also in undoing his extravagance. The entire government and all legislative assembly members moved back to Fort St. George—the old, faded colonial-era government buildings along the waterfront. The lavish new complex will be converted into a public hospital and a medical school. In a single scene, Jayalalitha provided health services and higher educational opportunities for the people, and also demolished Karunanidhi’s monument to himself. Back in Delhi, the Congress Party has gotten the message: Jayalalitha should not be taken lightly.

Indeed, she seemed to relish in the comparisons with Congress Party Chief, Sonia Gandhi. Like Mrs. Gandhi in Delhi, Jayalalitha herself welcomed Secretary Hillary Clinton to Chennai last year. The two chatted about Sri Lanka and other South Indian concerns, such as high-tech and foreign investment. Though Jayalalitha’s own views on foreign policy are still forming, her friend and advisor Cho Ramaswamy considers her to be a nationalist, who is starting to see the benefits of a strong relationship with the United States.

If Jayalalitha’s grandstanding were all theatrics, it might be bad for Tamil Nadu. But, in fact, she seems committed to making a difference. She consistently targets the huge deficits run by Karunanidhi, and has began to tackle subsidies that were draining public coffers. She surprised many in 2011 by actually raising bus and milk prices. She has committed to increases in education spending, including providing laptops for all students in 10th-12th grade.

Jayalalitha’s next step appears to be tackling Tamil Nadu’s huge infrastructure deficits that have slowed its otherwise impressive decade of growth. Since my first visit to Chennai in 2001, the state has experienced over $130 billion in investment, in both manufacturing and in software services. The region also has leveraged its great universities, its port and its quality of life to attract $5 billion in foreign investment, particularly in manufacturing. Ford and Hyundai and Nissan and Renault all build cars there.

But many have come to question is whether Tamil Nadu can keep up with Maharashtra and Gujarat. “Many investors are playing arbitrage with the big three states … and Tamil Nadu is starting to lose,” one investor told me privately. And that’s where the state’s infrastructure gap comes in.

The need for better roads, sewers, water, ports, and electricity are apparent to all. In January alone, Jayalalitha announced several infrastructure investment initiatives. The city hosted a smart growth conference. A new bus rapid transit system is being planned. And later this month, Jayalalitha herself is expected to launch “Vision 2025” —a planning document that would outline as much as $30 billion in public investment over the next decade.

Investors are watching closely. Of particular interest is electricity. “Gujarat is killing us on power,” one Tamil Nadu state official told me.

In the neighborhood where I lived—the upscale urban village of RA Puram—the power went out every day at 2 pm. The outage was always brief—whether I was at our cottage, or a private home, an office, a restaurant, or a hotel. Within seconds, the back-up generator would kick in.

Tamil Nadu is not alone, of course. Across India, power remains caught between private investors and government regulations and subsidies. The national government remains committed to subsidized electricity for poor farmers. In practice, free “agricultural” power is abused, and prices are kept artificially low for the other power. That means that state power corporations eventually run out of both money and fuel. They are forced to ration energy to all customers. And most industries and wealthy households have to go on international markets to buy fuel for back-up generators.

Still, Jayalalitha has pledged that she will tackle this set of issues. One energy investor gleefully reported that they were expecting Jayalalitha to raise prices by as much as 40%—allowing investment to finally turn a profit.

But while she has said she would reform the electricity sector, she has been cautious on one major decision that could provide power to the state. Nearly 400 miles south of Chennai, at the tip of the Indian subcontinent, sits the nearly completed Russian-built nuclear reactor at Kudankulam.

If the reactor goes live later this year, it would provide 2,000 megawatts of electricity. The central government holds authority over nuclear energy and has built and paid for the reactor. Yet Jayalalitha holds the final approval on opening the facility. It would appear to be a quick and easy decision for her (even if the reactor itself was over 25 years in development.)

Still, Jayalalitha has proceeded with caution. She has instead backed the protests from local fishermen who fear “an Indian Fukushima,” in the words of Mahatma Gandhi’s grandson. While several experts have vouched for the reactor’s safety, south India was hit hard by the 2006 Tsunami. Having a reactor sitting on that very coast stirs fears among the locals.

Many observers think that Jayalalitha will ultimately concede to the math of economic development—and also use the controversy to extract additional concessions from Delhi. The biggest cost to her is to appear to value the energy-hungry industries in Chennai above the environmental safety of near-subsistence fishers in south Tamil Nadu.

By all accounts, the chief minister possesses a sharp mind, and prides herself on asking hard questions, making quick (though not impulsive) decisions, and being a prudent administrator. While not a technocrat, she does take the merits of arguments seriously—both the policy merits, and the political merits.  

Still, many officials in her own government wonder if she has the attention to detail needed to keep up with other fast-growing states. Ministers and bureaucrats have been reshuffled on a regular basis—including the recent banishment of her closest political advisor. Whether she has done that to root out corruption or to sideline potential rivals remains unclear.

But if the legacy of “Jayalalitha III” really is going to be that of good governance, she will have to do something few Indian political leaders have done.  She will have to not only get rid of corrupt enemies and friends. She will have to not only make tough policy choices. She will also have to invest in the capacity of her own party members and in the state bureaucracy.

The title for that film, if she chooses to make it, might be: "Star Trek: The Next Generation."



[1] Jayalalitha’s AIADMK party actually slated a smaller number of candidates in 2011 than they had five years earlier, but they won an enormous percentage of seats.  For a thorough, and somewhat contrary analysis, see N Gopalaswami & Praveen Chakravarty, “The myth of the astute voter,” Business Standard, May 23, 2011.

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