Friday, May 12, 2006
DMK Rule: Policy Expectations in a Changing Polity
A modified version of this article is available here.
MUTHUVEL KARUNANIDHI must be a contented man. Not only has he secured the Chief Ministerial berth for himself for the fifth time, he has also inherited a State that is fiscally sound, with an impressive, steady growth rate and thus enormous potential for economic transformation. To understand what precise transformations the people of Tamil Nadu might actually expect, it is necessary to look beyond the signals emerging from the DMK's 2006 election manifesto and the election campaign headed by the party's feisty octogenarian leader. These signals only hint at what the tone of policy orientation might be for the next two years, based on the immediate mood of the party cadre and leadership. A more telling indicator is the `policy history' of Mr. Karunanidhi's party, particularly during its 1996-2001 term, and the lessons its experience of those years might offer it.
Although pre-election promises of largesse are only too familiar across many Indian States, successive governments in Tamil Nadu have shown a remarkable penchant to actually adopt and implement welfare-enhancing policies such as the noon meal scheme (NMS). Recent studies (for example, by John Harriss) suggest that this may be due to both the State's consistent commitment to pro-poor policies and the capacity of government institutions and the state bureaucracy to implement such schemes with relatively lower levels of resource leakage or wastage. Thus, the DMK's promises of cheap rice, land redistribution, loan waivers for farmers, and free television sets for women from poorer households cannot be dismissed out of hand as mere elements of what the media have dubbed as `sop opera'. However, the main question that will interest the common person in Tamil Nadu is: to what extent will the DMK's election promises be fulfilled, and how sustainable are they in both political and economic terms?
The DMK has pointed out that one source of finance for the colour television scheme and further subsidies proposed for PDS rice could be liquor manufacturing and trade (see `Promising Start', Frontline, April 2006). Any move to liberalise this sector would have unclear immediate and long-term consequences for the partial prohibition that has been in place for most of the previous decade. It is well known that liquor excise, particularly on arrack and toddy, can lead to the immiserisation of the poorest in the State. Such specific issues aside, there is the broad question of the fiscal dexterity of the administration. How will the promised bonanza for the masses of poor and lower middle class citizens be financed in the face of unavoidable commitments such as debt service costs, compensation to government employees (revised upward by the Fifth Pay Commission) and mass welfare schemes like the NMS?
This general question draws attention to a problem facing the DMK; the same problem was faced by the AIADMK in the past, and will be faced by future regimes in Tamil Nadu. A tightrope act is implied by the tensions between the need to maintain fiscal health in public finances and the need to provide benefits in a State where many traditional jobs have dried up and more than five million people are registered unemployed (BBC website, May 2, 2006). This balancing act had a precarious denouement during the previous era of DMK rule, between 1996-2001. Unable to rein in public expenditure, the DMK regime saw the revenue deficit burgeoning rapidly to unsustainable levels. The possibility of the State getting into a full-blown debt crisis was not inconceivable around 2001.
The AIADMK government showed some ingenuity in dealing with deepening financial problems, and managed to bring down the revenue deficit to 2.47 per cent of revenue receipts (according to recent estimates). That is, the AIADMK government, advised by an able Finance Secretary, was able to find ways to rein severe imbalances that were developing in the state economy at the turn of the century. More than the understanding of economic realities that these strategies implied, policy packages such as the Medium Term Fiscal Plan demonstrated the political will to risk potential unpopularity with social groups affected by expenditure cuts.
The new DMK government has the capability to stabilise and improve on this situation. A more nuanced picture of the party's motivations and capabilities as the representative of specific political interests in Tamil society can be gained from examining its historical roots in the Dravidian movement. As a number of scholarly accounts indicate, this movement, which culminated in the party's 1967 victory, was based on populist mass mobilisation of the backward classes and the rising and intermediate classes, primarily owners of small property. Contrarily, studies of the late 1970s and the 1980s support the existence of a strong link between the AIADMK's policy discourse and the lower socio-economic strata, especially women in rural areas.
Is such social polarisation still evident in the early 21st century? The 2006 election would suggest not. Indeed, experts would support this too, arguing that significant `social churning' (see, `Tamil Nadu's Changing Political Landscape', May 9, 2006) is under way in Tamil Nadu. Such analyses suggest that social polarisation is probably not evident to the extent it was in 1977, when M.G. Ramachandran's dramatic victory at the polls seemed to herald a second phase in Dravidianist mobilisation. For example, as Harriss and Wyatt explain, even the 1996 election marked a deviation from the long-term (1967-2001) trend of political competition in the State being dominated by two main players. They suggest that the emergence of Ramadoss' PMK and Vaiko's MDMK and finally Moopanar's TMC led to a situation where parties other than the Congress were in a position to tip the scales in favour of either the AIADMK or the DMK.
The dawn of multi-party politics in Tamil Nadu was nigh by the mid-1990s. In all likelihood, this process is coterminous with the blurring of social lines in party politics. In part, political competition itself can explain why rival parties in Tamil Nadu have aggressively courted every single community across the State; and the 20th century history of state politics shows this to be true. At the peak of the anti-Brahmin movement culminating in the unprecedented success of the DMK in the 1967 elections, the policy thrust of this party was clearly reform in areas perceived as a challenge to Dravidian dominance. Thus social radicalism, under what some have labelled `assertive populism', was the order of the day, manifested in language agitations, the demand for `Dravida Nadu', and fierce debates over reservation.
Intense political competition
However, these issues receded to the background during the 1970s, in part due to the potentially coercive nature of Centre-State relations and the threat of central intervention in State politics made possible by the division of powers enshrined in the Indian Constitution. Yet when the DMK returned to enjoy a full term in office again in 1996, 19 years after the AIADMK came to power, the range of policies it implemented was of an entirely different redistributive flavour. Since the welfare policies that were virtually public expenditure juggernauts (for example, the NMS) had already been set in motion by MGR and sustained by Jayalalithaa, there was no question of scrapping these in favour of policies that focussed more on intermediate groups than the lower classes. In fact, the most striking trend in policy-making that can be observed across the 1990s and beyond is intense political competition, leading to some ambivalence and occasional policy reversals by both major parties.
In general, however, it is clear that the DMK does not have a wealth of experience in dealing with this situation, and more specifically it cannot claim to have achieved a turnaround from the recent fiscal crisis. Of course, this does not in any automatic sense imply that the party is any less fit to govern than the AIADMK. However given that revenue deficit reduction through public expenditure cuts is obstructed by enormous barriers in this state (it would be political suicide for any Tamil Nadu party in power to scale down schemes such as the NMS and entirely unfeasible and undesirable to reverse Pay Commission recommendations), one must wonder how pre-election promises such as a free colour television set for every household will be financed. Conversely, there is some cause for concern that during the previous DMK regime the revenue deficit increased from about 2.94 percent in 1996 to 26.95 percent in 2000.
Nevertheless it should come as no surprise if the DMK continues to provide benefits to the poorer sections of society much in line with the `paternal populist' trend widely attributed to the years of AIADMK rule under MGR. Indeed, Mr. Karunanidhi has reportedly promised to provide two eggs per week in the NMS, when even the provision of one egg as part of the policy was described by a scholar as making "no sense in terms of nutritional cost-effectiveness" (Barbara Harriss). The campaign offer of free colour television sets to below the poverty line households, and PDS rice at Rs.2 a kg, are also examples of the DMK following a changed policy course since the early period of its rule in the 1960s — it is significantly more pro-poor now in the sense mass welfare is more its preoccupation than the welfare of more narrowly defined, intermediate groups of small property owners.
From this perspective, the DMK's policy manifesto must be welcomed. The real need for caution arises when these large-scale public expenditure commitments are juxtaposed with the party's penchant to indulge the needs of the intermediate and upper classes. On the one hand, the 2006 election demonstrates that the DMK's influence among the lower classes and minorities has clearly broadened and social churning has changed the shape of the political terrain, eroding traditional constituencies (however, this development must be qualified by the observation that the AIADMK enjoyed a greater share of the votes than the DMK, not counting allies for either — see data from Election Commission of India). On the other hand, Mr. Karunanidhi's party retains deep roots, nurtured through all the phases of the Dravidian movement by its leaders, among the intermediate and upper classes of the non-Brahmin and Brahmin communities.
This pattern of social partisanship implies a potentially higher risk of State resources being spread too thinly across broad constituencies (ironically, this may represent the flip side of more autocratic styles of governance seen in earlier regimes). Tamil Nadu can ill afford once again to be set back by a fiscal crisis, especially when the monsoons have helped spur the rate of economic growth and the prospects for all sections of the population are somewhat improved. As in times of distress, in times of relative plenty too the ordinary person is the ultimate victim or beneficiary of the perversities of State politics.
MUTHUVEL KARUNANIDHI must be a contented man. Not only has he secured the Chief Ministerial berth for himself for the fifth time, he has also inherited a State that is fiscally sound, with an impressive, steady growth rate and thus enormous potential for economic transformation. To understand what precise transformations the people of Tamil Nadu might actually expect, it is necessary to look beyond the signals emerging from the DMK's 2006 election manifesto and the election campaign headed by the party's feisty octogenarian leader. These signals only hint at what the tone of policy orientation might be for the next two years, based on the immediate mood of the party cadre and leadership. A more telling indicator is the `policy history' of Mr. Karunanidhi's party, particularly during its 1996-2001 term, and the lessons its experience of those years might offer it.
Although pre-election promises of largesse are only too familiar across many Indian States, successive governments in Tamil Nadu have shown a remarkable penchant to actually adopt and implement welfare-enhancing policies such as the noon meal scheme (NMS). Recent studies (for example, by John Harriss) suggest that this may be due to both the State's consistent commitment to pro-poor policies and the capacity of government institutions and the state bureaucracy to implement such schemes with relatively lower levels of resource leakage or wastage. Thus, the DMK's promises of cheap rice, land redistribution, loan waivers for farmers, and free television sets for women from poorer households cannot be dismissed out of hand as mere elements of what the media have dubbed as `sop opera'. However, the main question that will interest the common person in Tamil Nadu is: to what extent will the DMK's election promises be fulfilled, and how sustainable are they in both political and economic terms?
The DMK has pointed out that one source of finance for the colour television scheme and further subsidies proposed for PDS rice could be liquor manufacturing and trade (see `Promising Start', Frontline, April 2006). Any move to liberalise this sector would have unclear immediate and long-term consequences for the partial prohibition that has been in place for most of the previous decade. It is well known that liquor excise, particularly on arrack and toddy, can lead to the immiserisation of the poorest in the State. Such specific issues aside, there is the broad question of the fiscal dexterity of the administration. How will the promised bonanza for the masses of poor and lower middle class citizens be financed in the face of unavoidable commitments such as debt service costs, compensation to government employees (revised upward by the Fifth Pay Commission) and mass welfare schemes like the NMS?
This general question draws attention to a problem facing the DMK; the same problem was faced by the AIADMK in the past, and will be faced by future regimes in Tamil Nadu. A tightrope act is implied by the tensions between the need to maintain fiscal health in public finances and the need to provide benefits in a State where many traditional jobs have dried up and more than five million people are registered unemployed (BBC website, May 2, 2006). This balancing act had a precarious denouement during the previous era of DMK rule, between 1996-2001. Unable to rein in public expenditure, the DMK regime saw the revenue deficit burgeoning rapidly to unsustainable levels. The possibility of the State getting into a full-blown debt crisis was not inconceivable around 2001.
The AIADMK government showed some ingenuity in dealing with deepening financial problems, and managed to bring down the revenue deficit to 2.47 per cent of revenue receipts (according to recent estimates). That is, the AIADMK government, advised by an able Finance Secretary, was able to find ways to rein severe imbalances that were developing in the state economy at the turn of the century. More than the understanding of economic realities that these strategies implied, policy packages such as the Medium Term Fiscal Plan demonstrated the political will to risk potential unpopularity with social groups affected by expenditure cuts.
The new DMK government has the capability to stabilise and improve on this situation. A more nuanced picture of the party's motivations and capabilities as the representative of specific political interests in Tamil society can be gained from examining its historical roots in the Dravidian movement. As a number of scholarly accounts indicate, this movement, which culminated in the party's 1967 victory, was based on populist mass mobilisation of the backward classes and the rising and intermediate classes, primarily owners of small property. Contrarily, studies of the late 1970s and the 1980s support the existence of a strong link between the AIADMK's policy discourse and the lower socio-economic strata, especially women in rural areas.
Is such social polarisation still evident in the early 21st century? The 2006 election would suggest not. Indeed, experts would support this too, arguing that significant `social churning' (see, `Tamil Nadu's Changing Political Landscape', May 9, 2006) is under way in Tamil Nadu. Such analyses suggest that social polarisation is probably not evident to the extent it was in 1977, when M.G. Ramachandran's dramatic victory at the polls seemed to herald a second phase in Dravidianist mobilisation. For example, as Harriss and Wyatt explain, even the 1996 election marked a deviation from the long-term (1967-2001) trend of political competition in the State being dominated by two main players. They suggest that the emergence of Ramadoss' PMK and Vaiko's MDMK and finally Moopanar's TMC led to a situation where parties other than the Congress were in a position to tip the scales in favour of either the AIADMK or the DMK.
The dawn of multi-party politics in Tamil Nadu was nigh by the mid-1990s. In all likelihood, this process is coterminous with the blurring of social lines in party politics. In part, political competition itself can explain why rival parties in Tamil Nadu have aggressively courted every single community across the State; and the 20th century history of state politics shows this to be true. At the peak of the anti-Brahmin movement culminating in the unprecedented success of the DMK in the 1967 elections, the policy thrust of this party was clearly reform in areas perceived as a challenge to Dravidian dominance. Thus social radicalism, under what some have labelled `assertive populism', was the order of the day, manifested in language agitations, the demand for `Dravida Nadu', and fierce debates over reservation.
Intense political competition
However, these issues receded to the background during the 1970s, in part due to the potentially coercive nature of Centre-State relations and the threat of central intervention in State politics made possible by the division of powers enshrined in the Indian Constitution. Yet when the DMK returned to enjoy a full term in office again in 1996, 19 years after the AIADMK came to power, the range of policies it implemented was of an entirely different redistributive flavour. Since the welfare policies that were virtually public expenditure juggernauts (for example, the NMS) had already been set in motion by MGR and sustained by Jayalalithaa, there was no question of scrapping these in favour of policies that focussed more on intermediate groups than the lower classes. In fact, the most striking trend in policy-making that can be observed across the 1990s and beyond is intense political competition, leading to some ambivalence and occasional policy reversals by both major parties.
In general, however, it is clear that the DMK does not have a wealth of experience in dealing with this situation, and more specifically it cannot claim to have achieved a turnaround from the recent fiscal crisis. Of course, this does not in any automatic sense imply that the party is any less fit to govern than the AIADMK. However given that revenue deficit reduction through public expenditure cuts is obstructed by enormous barriers in this state (it would be political suicide for any Tamil Nadu party in power to scale down schemes such as the NMS and entirely unfeasible and undesirable to reverse Pay Commission recommendations), one must wonder how pre-election promises such as a free colour television set for every household will be financed. Conversely, there is some cause for concern that during the previous DMK regime the revenue deficit increased from about 2.94 percent in 1996 to 26.95 percent in 2000.
Nevertheless it should come as no surprise if the DMK continues to provide benefits to the poorer sections of society much in line with the `paternal populist' trend widely attributed to the years of AIADMK rule under MGR. Indeed, Mr. Karunanidhi has reportedly promised to provide two eggs per week in the NMS, when even the provision of one egg as part of the policy was described by a scholar as making "no sense in terms of nutritional cost-effectiveness" (Barbara Harriss). The campaign offer of free colour television sets to below the poverty line households, and PDS rice at Rs.2 a kg, are also examples of the DMK following a changed policy course since the early period of its rule in the 1960s — it is significantly more pro-poor now in the sense mass welfare is more its preoccupation than the welfare of more narrowly defined, intermediate groups of small property owners.
From this perspective, the DMK's policy manifesto must be welcomed. The real need for caution arises when these large-scale public expenditure commitments are juxtaposed with the party's penchant to indulge the needs of the intermediate and upper classes. On the one hand, the 2006 election demonstrates that the DMK's influence among the lower classes and minorities has clearly broadened and social churning has changed the shape of the political terrain, eroding traditional constituencies (however, this development must be qualified by the observation that the AIADMK enjoyed a greater share of the votes than the DMK, not counting allies for either — see data from Election Commission of India). On the other hand, Mr. Karunanidhi's party retains deep roots, nurtured through all the phases of the Dravidian movement by its leaders, among the intermediate and upper classes of the non-Brahmin and Brahmin communities.
This pattern of social partisanship implies a potentially higher risk of State resources being spread too thinly across broad constituencies (ironically, this may represent the flip side of more autocratic styles of governance seen in earlier regimes). Tamil Nadu can ill afford once again to be set back by a fiscal crisis, especially when the monsoons have helped spur the rate of economic growth and the prospects for all sections of the population are somewhat improved. As in times of distress, in times of relative plenty too the ordinary person is the ultimate victim or beneficiary of the perversities of State politics.
# posted by Narayan Lakshman @ 10:32 PM 
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