Multiple challenges, including Covid-19, await Stalin administration

Dravida Munnetra Kazhagam (DMK) government led by M K Stalin will have no honeymoon period as it has to get to work from the word go. The new government has multitude of issues to deal with like controlling the spread of Covid-19, ramping up vaccination drive, attending to poor fiscal health of the state, and fulfilling a slew of promises made in the election manifesto.

No doubt, the DMK was waiting to come to power to break its 10-year-long hibernation, but the second wave of Covid-19 will give no room for the new dispensation to settle down.

Political challenges

Additionally, the DMK may have to handle consequences that arise out of the reopening of the oxygen plants inside the Sterlite Copper factory in Thoothukudi that was shut in 2018 for “flouting environmental concerns and established rules.” Also, it has to rein in its leaders and cadres who were accused of land grabbing and high-handedness during the party's 2006-2011 tenure.

Read: Twin leaves wilt under DMK's rising sun in Tamil Nadu; Stalin set to be CM finally

“Stalin has promised clean and transparent administration, and should ensure that there is no interference either from members of his family or other extraneous party pressure in his administration,” senior journalist R Bhagwan Singh told DH.

The new administration will have to continue wooing global companies to set their shops in Tamil Nadu, and build on the electric vehicle and electronics and hardware policies released by the outgoing AIADMK administration. The state continues to be one of the favourite destinations for Foreign Direct Investment (FDI).

The fight against Covid-19

Keeping Covid-19 cases under check, swinging into action to keep the medical infrastructure ready for any third wave and accelerating the vaccination drive would be the biggest challenges for the new dispensation. The state added over 20,000 cases on Sunday and hospital beds, including those created during the pandemic, are filling up fast.

With the Centre playing the hard ball with states on transferring GST dues and other funds, the Tamil Nadu government would be hard-pressed for financial resources more so with increasing number of Covid-19 cases and states being asked to take the burden of vaccinating people between 18-44 years of age.

“Handling the pandemic is going to be a huge challenge, as the situation is unlikely to improve for the next six months at least. The new government will have to mop up enough resources to augment hospital beds, oxygen, and other critical infrastructure. The biggest challenge is to convince people to get vaccinated,” Dr J Amalorpavanathan, the man behind Tamil Nadu's robust organ donation system, told DH.

Attending to the "bad" fiscal health

While in Opposition, the DMK had consistently attacked the AIADMK for “spending recklessly” and leaving the finances in a “dire state.” The state government's debts that stood at Rs 1.30 lakh crore in 2011 when the DMK handed over the baton to AIADMK has now gone up to Rs 4.85 lakh crore, and the amount would go further up if interest payments and liabilities of state-level public sector undertakings (SPSUs) are taken into account.

Besides the additional spending on the health sector, DMK will also have to find resources to implement its election promises like one-time assistance of Rs 4,000 to those affected by Covid-19 lockdown, reducing the prices of diesel, and petrol, and Rs 100 subsidy to each cylinder.

Prof. R. Srinivasan, Department of Econometrics, University of Madras said one has to accept the fact that the state is not collecting enough revenue, and it has to spend only from available resources. He said the new government should think about “specific interventions for specific groups of people instead of handing out assistance universally.”

“States can blame the Centre for not releasing the transfers but that is a political game that can go on and on. The issue here is how much you can spend? Salary, subsidies, and transfers are 150 percent of the state's tax revenue which means all are committed expenses. If this is the case, what is the scope for any discretionary spending thereafter? We have got to spend very carefully whatever little we got to spend. It has to be prudently done,” Srinivasan told DH.

'State's in-built economic dynamism'

Acknowledging that the state's finances are in a “bad situation,” Prof M Vijayabaskar of the Madras Institute of Development Studies (MIDS) said things are not looking quite good on the fiscal front and blamed the outgoing AIADMK Government of spending “unnecessarily” when the state is already fiscally stretched.

However, he said Tamil Nadu can offset a part of this disadvantage due to its in-built economic dynamism.

“In terms of investments, TN is next only to Maharashtra, and in terms of growth also, the state has done well. If this is the sign of things to come, you can partly offset the setback. This is not available to some of the other states. But this is still going to burden, especially, with the declining share of transfers from Centre,” Prof Vijayabaskar, also co-author of Dravidian Model: Interpreting the Political Economy of Tamil Nadu, told DH.

Handling the pandemic and assistance to the needy

On Covid-19, Prof. Srinivasan said the government should opt for “out-of-the-box” solutions by identifying people who need help during any lockdown, which seems inevitable now, that may be imposed instead of crediting money into everyone's account irrespective of their economic status.

“Here the whole discussion in the system is let us do it for all. When you universalise, obviously you are spreading your limited resources thinly over everyone. Whereas, the people who need it in a larger quantity get it very little, and people who don’t need it also get some amount of money. The end result is a real impact that is required on specific people is not seen,” he said.

Prof. Srinivasan said it was time that governments thought about specific interventions for specific groups of people, and arranged that their income is supported in one way or the other.

“Trying to please everyone but nobody will be pleased, because there are people who need more than what is given. People who don't need money are also getting it. We are disproportionately spending the money. So the effectiveness of public spending is so low that it makes little impact in improving the livelihood of the people.” he said.