SOUTHERN EXPRESS

The state that witnessed a growth rate of 6.3 per cent during the 1990s can today boast of a literacy rate of 73.4 per cent and an ever-increasing pool of skilled professionals. IT and ITES, hardware and real estate are key sectors wooing big ticket investors in to Tamil Nadu

By S S Jeevan in Chennai

In no state in India is politics as colourful as it is in Tamil Nadu. Congress, the only truly pan-Indian party, has been out of power for so long that without strategic alliances it cannot hope to be even a blip on the state’s political radar, which has been dominated by the DMK and its breakaway faction, the AIADMK. And in no state in India has the politics of vendetta been practised as rigorously as it has been in Tamil Nadu—whether it was the midnight arrest of DMK chief and Chief Minister M. Karunanidhi in June 2001 or the humiliation of his arch rival AIADMK chief J. Jayalalithaa in the Assembly, the state has often witnessed high voltage drama enacted by some of the former demigods of the film world. Prone to high antiincumbencies, Tamil Nadu has ruthlessly voted out the incumbent. Yet one thing has remained constant: the state’s delivery system. Be it electoral fluctuations or the vagaries of monsoons, they have had very little impact on the political economy of the state. Both Karunanidhi and Jayalalithaa have extended populist schemes and claimed credit for the success the state has earned over the years.

Tamil Nadu benefited from favourable political dispensations in the past—whether it was the social reform movements of the 1960s or charismatic leaders like K. Kamaraj, C. Subramaniam and C. Rajagopalachari who gave the state an edge through their leveraging power in Delhi. Today, one of the largest contingents of ministers from any state in the UPA Government is from Tamil Nadu. And the dozen-odd ministers, led by Finance Minister P. Chidambaram and Telecom Minister Dayanidhi Maran, have worked towards driving foreign investment into the state. Out of the total foreign direct investment (FDI) that flowed into India last year, 9.12 per cent went to Tamil Nadu. The state registered an annual growth rate of 6.3 per cent during the ’90s, ahead of 15 major states. In terms of Human Development Index (HDI), the state climbed from seventh position in 1981 to third position in 2001. That apart, Tamil Nadu can boast of a literacy rate as high as 73.4 and an ever-increasing pool of skilled professionals. Also, it is one of the few states in the country to have surplus power supply. Little wonder, the flood of investments hasn’t stopped. In the past four months, over Rs 2,234 crore have been invested in the state. By August 2004, FDI into Tamil Nadu was a whopping Rs 22,582.64 crore. And the numbers are only increasing.

The global players to have invested here are Nokia, Flextronics, Hyundai, Dell, Ford, Royal Enfield and Samsung. According to the Confederation of Indian Industry (CII) estimates, over eight lakh jobs are expected to be created by 2011. Moreover, it is also becoming the preferred destination for the back offices of the world. Standard Chartered, World Bank, Citibank, Sutherland Technologies, ABN Amro are some of the leading banks that have their back office operations here. In Chennai alone, there are plans for four multiplexes, housing over 30 theatres, and half-a-dozen seven-star hotels, including the Hilton. Glitzy shopping malls such as the Chennai Citi Centre are showcasing this new-found prosperity. The police too zoom around in Hyundai Accent cars patrolling Chennai’s streets.

“Good infrastructure and the advantage of connectivity with ports, a well-laid road network and numerous airports are the key drivers of investment in the state,” says economist and member of the state Planning Commission K. Srinivasan. The state is witnessing a boom in sectors like automobile, IT and ITES, hardware and real estate. IT Secretary Chandramouli says that a new IT project can be ratified in just 72 hours by the state machinery. “It’s a place where entrepreneurship is respected,” says Sanjay Jayavarthanavelu, chairman of CII, Tamil Nadu. More than 345 IT firms came up in Chennai last year. Software exports from Chennai last year stood at Rs 14,115 crore. The state is also home to some of India’s biggest corporate success stories such as TVS, MRF and Ashok Leyland, as also public sector giants like BHEL and cement companies like Ramco. There are now proposals to create SEZs in many smaller cities like Tirunelveli and Salem, while IT giants are already opening centres in other places like Coimbatore and Trichy.

The state has the fifth largest economy in the country and ranks second in per capita income. When it comes to development, Tamil Nadu definitely scores a point. It is the first Indian state to have introduced the concept of universal midday meals and make computer education available in all government higher secondary schools. There are more than 252 engineering colleges in Tamil Nadu that churn out 79,000 engineers every year. The role of women, too, has played a part in this transformation. There are more than two million women self-help groups which play a pivotal role in the administrative and financial sectors. Unlike other states, the delivery systems here have won praise, despite the fact that it has one of the largest bureaucracy in the country, not to mention an active Panchayati Raj system.

However, there are a few negatives attached to the state. While poverty levels in Tamil Nadu declined, the number of people below poverty line still stood at 140 lakh in 2004. The rate of unemployment is 5.25 per cent, against the national average of 3.77 per cent. Karunanidhi recently launched a monthly stipend scheme for the unemployed to cover more than 2,06,766 registered beneficiaries across the state. One of the reasons for a large number of people slipping below the poverty line is the fact that the backbone of the state’s economy—agriculture—has taken a beating. Yields have come down and total land area under agriculture has also dipped. “There is an overall decline and it is more acute in terms of productivity—both for food and non-food crops,” say J. Jeyaranjan, director, Development Alternatives and K. Nagaraj, a professor at the Madras Institute of Developmental Studies, in a recent study. The annual growth rate of the value of agricultural output was 2.4 per cent per annum between the early ’60s and early ’90s, which is lower than the national average of about 2.7 per cent per annum. Though the state still remains among the top producers of rice , it ranks tenth in agriculture among the 17 major states of India.

Water too remains a developmental challenge for the state. Not just Cauvery, Karunanidhi has locked horns with his Kerala counterpart V.S. Achuthanandan over the issue of water in the Mullaperiyar dam. As per a study of the dry regions of seven states, including Tamil Nadu, common property resources (CPR) have been vanishing since the early ’50s. Despite water problems, the setbacks in agriculture have been less felt— there was hardly a case of a “farmer suicide” in the state. This is largely due to the state’s diversified economy. From Chennai, now being called the “Detroit of India”, having become a manufacturing hub, or Tirupur being referred to as “Textile Valley of India” or even a small town like Sivakasi being called “Little Japan”, Tamil Nadu is today full of ingenious success stories. Sunrise sectors like biotechnology are mushrooming with companies like LifeCell strengthening their presence in the state.

Real estate has become the new calling card of growth and many believe that the IT-driven boom and large foreign remittances have led to an escalation of prices. R. Jeyakumar, one of the state’s top builders, says that land value in Chennai has shot up by 100-150 per cent in the past three years. Real estate consultants Jones Lang LaSalle estimate that 4.5 million sq ft of office space would be occupied in Chennai by the end of this year. Another sector flourishing in Tamil Nadu is tourism, as temple towns such as Mahabalipuram and other hill resorts cornered over 11 per cent of the tourist inflow in 2004. High-end medical care too is attracting a large number of foreign patients, and leading private players such as Apollo Hospitals are earning a fair share of their revenues from medical tourism.

The tremendous growth of cities and towns may have provided new means of livelihood for those equipped with professional and technological skills, but for millions employed in the unorganised and small-scale sector, this has meant loss of social security. There are wide differences in the per capita income across the state, even though it ranks second in the per capita income index. Of the 29 districts, only nine have a per capita income higher than the state average. For instance, Chennai has a per capita income of Rs 15,828 while neighbouring Villupuram district has Rs 6,013, the lowest in the state. “The underprivileged need to be empowered with professional skills to help them find a footing,” says agricultural-economist and architect of the Green Revolution M.S. Swaminathan, adding, “the agro-economy needs to be strengthened as our future is dependent on its revival.” While Tamil Nadu’s performance in healthcare is better than the rest of the country, it doesn’t match Kerala. In terms of access to maternal and child health, the state has done well, but as far as child mortality and nutrition is concerned, it is just about average. Significantly, it also scores quite low in sanitation. The Chikungunya virus affected thousands of people in the state. Also, there has been an increase in the number of AIDS cases. “The number of people infected with viruses is increasing, and this is largely due to mutating viruses and a polluted urban environment,” says Dr Suraj Balaji of Balaji Nursing Home, a clinic in south Chennai. Though access to healthcare systems in the state is quite good, the growth is taking place largely in the private sector, making cutting edge remedies out of the reach of the poor. The pattern of foreign funding is focused on communicable diseases and not much on common diseases like malaria. “The Government and the private sector must work together to arrest the growing epidemic of environmental diseases,” says Magsaysay winner and director of the Cancer Institute, Dr V. Shanta.

Such are the challenges for Karunanidhi—to be able to attract investments while bridging the ever-widening gap in the state and creating new stakeholders in the developmental cake at the same time. He was one of the leading stalwarts of the Dravidian movement—which enabled the lower castes to assert their rights and challenged the distribution of power—along with former chief minister C.N. Annadurai. In a sense, the scrapping of the Common Entrance Test last week can be seen as an acceptance of the growing urban-rural divide. And today, Karunanidhi may perhaps need to re-engineer a more common distribution system in an era of rapid economic globalisation.

(India Today, December 25, 2006)