What does Jayalalithaa’s return mean for Tamil Nadu’s economy?

What does Jayalalithaa’s return mean for Tamil Nadu’s economy?

Tamil Nadu, a southeast Indian state, has suffered from an unsteady economy and high youth unemployment. In May, Tamil Nadu’s popular Chief Minister J. Jayalalithaa returned for a fifth term after being acquitted of corruption charges. How will “Amma’s” comeback effect Tamil Nadu’s economy?

J. Jayalalithaa is one of India’s most politically resilient politicians. Known locally by her nickname, “Amma” (mother), the former Tamil film star has served four terms as Chief Minister (CM) during the 1990s and 2000s.

Jayalalithaa’s party, the AIADMK (All India Anna Dravidian Progress Federation) is a centrist populist party that regularly dominates the Tamil Nadu Legislative Assembly elections and is heavily reliant on her widespread personal adoration.

Meanwhile, Prime Minister Narendra Modi’s government projects a platform of actively fighting corruption and fostering economic prosperity. His cabinet members – though keeping their distance – have been critical of Jayalalithaa.

Corruption charges

In 2014, Modi’s Baratiya Janata Party (BJP) filed a disproportionate assets case against Jayalalithaa in Tamil Nadu’s neighboring state of Karnataka’s High Court. The powerful CM was convicted and received a jail sentence, while her fleet of luxury cars was paraded on TV.

However, when the ruling was overturned, the BJP did little to further the issue. Jayalalithaa’s deputy, O. Paneerselvam, took over as the CM but led a shaky government that was widely viewed as ineffective without her leadership.

Jayalalithaa’s party’s seething rival, the DMK (Dravidian Progress Federation), a leftist populist party, has already filed an appeal against the overturn of her conviction.

After Jayalalithaa reassumed her office, the Indian Minister of Finance stated that BJP would maintain good relations but did not intend to seek an alliance with AIADMK (nor with the DMK).

Hope for the economy

Pon Radhakrishnan, India’s Minister for Road Transport & Highways and a BJP leader, made an effort to reconcile relations with Tamil Nadu’s CM by suggesting her return to power will be good for the southern state’s economy.

Tamil Nadu’s economy has had its fits and starts. Recent statistics show the unemployment rate for post-graduate students is startlingly high at 13.5 percent. This is surprising for a state with the highest level of private businesses in India (11 percent).

Furthermore, investment and manufacturing in the state has been sputtering since Jayalalithaa’s indictment last fall, and The Global Investor Meet, hosted in Tamil Nadu, is now rescheduled for September. Hope for political stability may bring about further investor confidence.

Following her swearing-in ceremony, Jayalalithaa gave approval for a slew of new economic initiatives. These measures consist of a workforce training program for women, along with road and water infrastructure development.

The state’s emerging solar sector has failed to pick up any significant investment since it kicked off in 2012. Tamil Nadu has been lagging compared to its neighboring states to develop solar energy projects. A new solar-powered irrigation project in the Sivaganga district was completed with the help of an 80 percent subsidy.

Irrigation innovation will be helpful for the state’s agriculture scene in the wake of a harsh lengthy drought in 2012 and a deadly nation-wide heat wave.

In addition, Jayalalithaa plans to utilize her personal “Amma” branding to sustain her popularity with the working class. 45 new canteen stores and other state subsidized development plans are scheduled for expedited delivery throughout the state.

Jayalalithaa is no stranger to international attention, either. Prior to her indictment, she met with Arnold Schwarzenegger in Chennai. He lauded her social empowerment efforts for women and her clean-energy projects.

Political rivalry

At the end of May, DMK Treasurer MK Stalin delivered a lengthy and blistering attack on the AIADMK’s record before large pro-DMK crowds in Madurai. For the DMK, this is significant, since the city of Madurai is considered to be the stronghold of Stalin’s older brother, MK Alagiri, who was expelled from the party a few years ago. This suggests that the party is healing over the internal divisions brought on by Alagiri’s expulsion.

Stalin is the son of MK Karunanidhi (who turns 91 this June) and is widely expected to take over his aging father’s role as the head of the DMK soon. The Indian government recently revoked the DMK-backed Sun TV radio network’s security clearance on unspecified reasons. The channel’s owners, the Maran brothers, have close family ties to MK Karunanidhi.

Tamil Nadu is preparing for local elections next year. It is not yet clear how this political drama will play out. Jayalalithaa’s return may bring about a degree of political stability that could be good for the state’s economy. But the southern state’s deep-rooted problem of corruption is sure to remain.

Until Tamil Nadu and India as a whole can rein in the problem, significant economic growth and foreign investment will be troublesome. One thing that is certain, though – Jayalalithaa will remain a key figure in Tamil Nadu’s political scene for some time coming.

About Author

Chris Solomon

Chris Solomon is the GRI Guest Post Editor and a Senior Analyst. He has supported several US government-funded international development programs in the Middle East and Africa throughout his professional career. He has also been a guest lecturer at the University of Maryland’s School of Public Policy on the U.S. strategy to combat ISIS. Christopher holds a master’s degree in Public and International Affairs from the Graduate School of Public and International Affairs (GSPIA) at the University of Pittsburgh. Follow him on Twitter @Solomon_Chris.