Addressing the national council of the Confederation of
Indian Industry (CII) in Chennai on July 4 last year, Chief Minister
Jayalalitha told the gathering of industrialists, that the ‘Vision-2025’ document,
to be unveiled by the Tamil Nadu government, will contain clear-cut policies
for promoting investments in infrastructure such as power, ports and ship
building. ‘One of the immediate tasks is to improve the investment climate and
make our state the most favoured investment destination”, she said. She claimed
that TN remained as one of the leading states of manufacturing till 2006 (when
she was the CM), ‘however, subsequently, in recent years, the performance of TN
in attracting investments declined’. After her government took over, she was
witnessing ‘a very enthusiastic response’ from the corporate world in making
investments in the state. Acknowledging that there was nervousness in some
sections of the corporate sector arising out of recent powercuts, she assured
the industrialists that her government was making efforts on war-footing to
correct the situation, “Very soon we will be able to make our state to power
surplus state once again.”
All her tall claims about her regime during 2001-06 are blatant
lies and so too are her remarks on the previous DMK government’s achievements
and the present situation after her return to power. From the sluggish pace of
attracting investments in 2001-06, during the DMK rule Tamil Nadu received 43
major industries with an investment of Rs.50,615 crore. But the situation has
completely changed with ADMK returning to power. For instance, the last year of
the DMK rule was good year for the automobile industry in the state. According
to its estimation over $3 billion (around Rs.13,800 cr.) was invested in
Chennai by the car manufacturers by the end of 2010. But after ADMK assumed
office, not only are new auto makers choosing Gujarat over TN, but erstwhile
main stays of the auto scene in Chennai have also moved out. In August last
year, French car maker Peugeot, after meeting Jayalalitha, had set up their
Rs.4,000 cr. plant in Gujarat. More
worryingly, Ford which established its first factory in India at Maraimalai Nagar near Chennai have
shifted its second facility – a Rs.4,000 crore investment with an initial
installed capacity of 2.4 lakh units annually - to Gujarat.
There is not a single worthwhile proposal that ADMK regime has attracted so far
and this is what Jayalalitha says she is witnessing ‘a very enthusiastic response’
from corporate world in making investments in the state after her government
took over.
On the power situation, her government’s efforts on
war-footing, have resulted in official power-cut durations increasing from one
hour to two hours in Chennai and from 4 hours to 10 hours in the rest of the
state and weekly power holidays for industries. The state will become power
surplus because of the power projects envisaged and started during the DMK rule and not even by an iota due to her
contribution.
While such is the state of affairs in her regime now,
Jayalalitha came out with a grand announcement on March 22, investing a
hyper-ambitious Rs.15 lakh crore ‘Vision Tamil Nadu 2023’ document. (Why the
year was changed from 2025 to 2023 is not known)
Ten months since she came to power, the Tamil Nadu chief
minister J Jayalalithaa has unveiled her dream future for the state — a
poverty-free, world-class investment destination with equal accent on human
development.
No other dream has been this big, with the exception of,
perhaps, Gujarat.
Everything about this 11-year-long perspective plan titled
Vision Tamil Nadu-2023 is super big: taking the state to one of the three top
investment destinations in Asia, an investment of Rs 15 lakh crore, an increase
of the state’s GDP to 11 percent, a six-fold rise of the annual per capita
income to an envious Rs 4.5 lakh, an addition of 20,000 MW of power capacity
and so on.
Through an inclusive growth plan, the state will largely be
free of poverty by 2023, the document said. By 2023, the state now reeling
under a crippling power crisis, will have surplus electricity.
The vision document reads like a completely new universe. It
has massive expansion of road networks, particularly the four and six lane
highways; ports, transportation, storage and cold-storage infrastructure;
large-scale agricultural development including horticulture parks,
agro-processing zones, restoration of wells, canals and micro-irrigation and
massive skill development of people. The vision document targets job-oriented
skill building of 20 million people.
Infrastructure development would absorb a bulk of the
planned investment. For instance, road development, mainly multi-laning will
require Rs 1.3 lakh crore; the investment in power generation will require Rs
4.5 lakh crore; and three greenfield ports capable of handling 150 million
tonnes of cargo a year will cost Rs 15,000 crore. The implementation of the
plan will involve considerable public private partnership (PPP).
Where from will she get financial resources for this dream?
She acknowledged that the State government alone could not meet the total
projects’ investment requirement of Rs.15 lakh crore. “A substantial portion of
the financing for infrastructure has to be mobilized from non-governmental sources,
including private sector banks and Foreign Direct Investments.”
People have seen lofty goals, unkept promises and failed
policies of Jaya’s regime. What was the process followed to formulate the
Vision? Whose vision is it? Is it a top-down vision? Were the people of Tamil
Nadu consulted? During her last tenure also she claimed to make Tamil Nadu
numero uno state in India.
But nothing happened.
From Jayalalitha’s Srirangam constituency one Rajagopal has
posted this comment in Zee News. “The Millennium’s joke. A woman who has no
Vision of Today with the state with highest inflation, no power, highest crime
rate, no roads, no garbage clearance, making hallow promises to a bunch of
idiots who believe in fantasies. Never has TN so badly placed in the history of
Independent India. She with all her ill-gotten wealth is running the state. TN
has become the haven for criminals from all over India.
It seems to be the joint effort of the Asian Development
Bank (ADB) and the State Government, without formally associating with the
exercise, eminent experts in the respective fields covered by the plan, with
knowledge and experience in handling micro and macro issues involved in framing
and implementing similar plans in the past. Institutions such as the ADB tend to
look at problems and prospects from an academic and theoretical mindset, and
the officialdom of a Government is notoriously insulated and isolated from the
ground realities.
The participation of high-profile economic players within
the country in the preparation of the present document would have helped infuse
into it a sense of down-to-earth realism born out of their mature study and
reflection.
For, it is not enough, in the name of vision, to merely
compile a long list of idealistic proposals, however desirable in themselves
they may be. In a context in which resources are scarce and the State has to
work the plan within the bounds of a federal system, laying down priorities
becomes immensely important.
The rub is going to be finding the Rs 15 lakh crore to be
spent in the next 11 years on infrastructural projects encompassing all these
goals. The average per year works out to Rs 1,35,000 crore, or ten times the
annual expenditure of around Rs 14,000 crore by the State on capital account.
The Vision 2023 document envisages mainly four sources for
the huge outlay: The first is “the fiscal space created within the fiscal
deficit of 3 per cent of the State Gross Domestic Product”.
This means that in the years there is limited room for any
manouver and hopefully there will be no major jump in needs for handouts either
proactively (welfare programmes) or reactively (as in the case of natural
disasters).
At the moment, these are mere words, as the document
contains no evidence of any concrete steps having been worked out on this
account.
The document hopes to make the infrastructure services
self-financing and sustainable by carrying out appropriate sectoral reforms and
ensuring suitable cost recovery. This hope, again, is rather vague, in the
absence of any cash flow chart based on existing and projected parameters.
The State Government also proposes to enlist the
participation of private sector (including FDI, domestic investments, and bank
funding) under the private-public-partnership mode to the extent of one-third
(or Rs 5 lakh crore) of the outlay at the rate of about Rs 60,000 crore from
now on. One can only wish the Government all good luck on this score. Finally,
of course, as is only to be expected, the State Government intends to heavily
lean on the Centre to fund the Strategic Plan “to the extent it can”.
The investment figure of Rs.15 lakh crore is largely sought
to be met through private sector contribution. As the chart in Page 39
projects, share of private sector contribution is slated to jump from 15 per
cent in 2010 to 42 per cent in 2023. Correspondingly share of state sector is
slated to drop from 60 per cent in 2010 to 28 per cent in 2023. The absolute
numbers are quite bewildering. State’s share in investment in infrastructure is
slated to raise from Rs.15,000 crore in crore in 2010 to Rs.66,000 crore in
2023. For this to be realised:
- Tax revenues need to be buoyant – SDP growth should be high throughout
- State should bare a tight control on expenditure . That is all freebies should be held in high leash.
Private sector contribution is perhaps
the most challenging past of the vision document. From Rs.3,750 crore in 2010
it projects investment from private sector sources to jump to Rs.99,890 crore
by 2023. It will not be an exaggeration to say that the vision targets could
simply fail if this is not realised. There are some serious issues this bearing
fruit. Some of them are!
1.
Rising interest rates – much higher since the Yeshwant Sinha days!
2.
Inter-state competition for Private Public Partnership model projects
3.
Non availability of sufficient number of players with the experience of
executing large projects (that many existing infra companies are in reality
crony capitalist does not help much).
4.
Inadequate preparation. Even today many of the implemented or under
implementation projects are beset with problems. E.g. UMPPs, Delhi,
and Mumbai Airports, many DISCOMs
For this scale of growth, apart from
political leadership, the government machinery needs to function competently,
and fearlessly. Inability of the political leadership to foster this can trip
all good intentions.
It is in this respect that Jayalalitha,
by her very mind set and attitude, is incapable of accomplishing such grand
visions. During her previous regime she announced so many lofty ideals but
achieved nothing.
In these days of democratization of
even corporate sector, democracy is an anathema for her. It is universally
known and her party minions take pride in it, that Jayalalitha leads an one
person political party and time and again the governments led by her were also
one person regimes, in which bureaucrats are reduced to the level of
subordinate servants, with no say whatsoever in the administration and just
carrying out the directives of the Chief Minister and always remaining on their
toes to please the whims and fancies of Jayalalitha. In the state Secretariat,
the Chief Secretary is Head Clerk and the Secretaries are just clerks.
(For instance in the preparation of the
Budget for 2012-13, the ministers including Finance Minister and Secretaries of
departments had no roles whatsoever)
Yet another requisite of this
liberalization age is transparent administration, which again is the casuality
in this one person government. Corporate investors, both domestic and foreign,
will not be impressed by lame duck ministers
who are constantly kept changing and a toothless bureaucracy.
Hence by all means, objectively in
resources mobilisation for such a dream project and subjectively by her
despotic way of governance, Jayalalitha cannot and uncapable of fulfilling the
highly ambitious Vision 2023.
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