Will the expert group appointed by the Tamilnadu government be able to solve the acute rich-poor divide in the state?

Photo caption: File photo of Royal Enfield workers strike

Photo credit: https://tnlabour.in/automobile-industry/8147

President’s Blog

The decision to set up an Economic Advisory Council by the Tamilnadu government comprising international experts has been the talk of the town in recent days.

The council comprises former RBI Governor Raghuram Rajan; Nobel Laureate and Professor of Poverty Alleviation and Development Economics at the Massachusetts Institute of Technology, US, Esther Duflo; former chief economic advisor Arvind Subramanian; development economist and visiting professor at Ranchi University and Honorary Professor at the Delhi School of Economics Jean Drèze; and former finance secretary S Narayanan.

It might appear at first glance that these experts might do the trick and set right some of the glaring inequalities in the state and retrieve the state from the low depths it plumbed during the first and second phases of Covid. But the fact that many of these experts have advised earlier governments and have not been able to find the key to economic prosperity for all sobers our expectations.

In April 2020, after the first full month of lockdown, Tamil Nadu’s unemployment rate touched a record 49.8%. In May, it dropped to 33% and in June, to 13.5%. Cumulatively, Tamil Nadu’s unemployment rate for the three-month period was higher than the national average as well the state’s 6.4% rate in the pre-lockdown period.

The unemployment rate that is used by statistical agencies underestimates the actual rate enormously because it is computed as the number of unemployed persons “who are willing to work and are actively looking for a job expressed as a percent of the labour force”. It leaves out a large chunk of the population who haven’t had any school education and feel unfit to do any job. It also leaves out the large number of women who have no option but to remain unpaid home makers because they do not have the supportive environment to become workers. In the previous census males had a work participation rate of 59% and females, a very low 32%. The CMIE data also suggest that at least since January 2016 there has been a steady decline in Tamil Nadu’s work participation rate.

The drop in unemployment rate in May and June is more related to the return of guest workers to their native states of Jharkhand, West Bengal and Bihar among others. Though their return journey started in May, it was in June when most of them left Tamil Nadu.

Thousands of factories and MSMEs remain closed in the state due to various reasons. Lakhs have been rendered jobless in the firecracker industry in Thirunelveli district, and in industrial clusters in the Tiruppur, Erode and Karur belts as well as the Ranipet and Vellore belts. The closure of tanneries in Dindigul is another example. In most of these cases it appears that smaller factories and MSMEs have been closed citing environmental factors, with the government refusing to provide resources to help them come out of the crisis. Big factories and establishments in the state have taken advantage of these restrictions on smaller units to expand their operations and capture markets with their unlimited resources to obtain environmental clearances and ensure favourable policies from the government.

The advent of these supermen experts gives the impression that they would provide a magic formula to the government to keep the profits of monopolies high while bringing down the huge income, wealth and consumption disparity in the state. Nearly 30% of the population of Chennai live in slums. Average size of operational holdings in the countryside in the state is a mere 0.6 ha, barely enough to feed a family.

There are many other issues that the people of the state are facing such as increasing privatisation of education and healthcare, low student achievement levels, high costs of college education, plummeting groundwater levels, the drinking water crisis in the cities, massive indebtedness of peasants, land acquisition by corporate vultures, and so on.

But an illusion is being created that Tamilnadu is somehow exceptional within the Indian Union. It is often portrayed as a progressive and welfare state. Regular freebies, distribution of some essential commodities at the ration shops, the noon meal scheme and other such interventions are cited as proof that the ruling elite in the state is progressive and humane. But nothing is farther from truth. The rich are getting richer, the poor even poorer. The gulf between them is widening everyday as attested by the high levels of income, wealth and consumption disparity in the state.

The people of Tamilnadu cannot be fooled by the appointment of such expert committees and the propaganda that Tamilnadu is doing better than other states because it is a welfare state. Such propaganda and lies can fool a few but they cannot fool the millions of people who have lost their jobs, who live in abysmal conditions in slums, whose have lost their land and assets, and those who are forced to migrate to other areas of the country in search of jobs.

One has no details on what the TN government of Stalin and the Finance Ministry led by Mr. PTR Thiagarajan actually have to offer. What kind of stimulus to the economy are they proposing? Will farmers be delivered from their back-breaking debt, a remunerative price assured for their produce, and safety for their land guaranteed? Will the vast army of unemployed be provided job opportunities and their rights as workers honoured? Will taxes be restructured in a way that more money is put in the hands of people and their buying capacity enhanced? Will the experts have a solution to prevent people being fleeced by private profiteers in education and healthcare? Where will the funds be found for all these measures?  Without such details it would be impossible to assess what kind of an impact this `dream-team’ will be able to make on the economic landscape of Tamilnadu.

By admin