Palanivel Thiagarajan, Tamil Nadu finance minister, is one of the most brilliant, persuasive and outspoken political leaders who stands on the other side of BJP and Narendra Modi. In an interview with mathrubhumi.com, he speaks on a range of issues, from his experience in government to the debate on South vs North.
It is one thing to be in the opposition and entirely another thing to be part of the regime, the administration. How has it been the last one and half years?
It has been a huge learning experience. Everyday I am getting better at the job. Mainly two things 1. How to effect change and get good results.You won't get better results if you don't change it. 2. I am learning not to be very open. I am learning to keep a lot of things to myself. Transparency is good but sometimes it can create political and other problems. So, I am learning to be much more circumspect. I shouldn't pick fights that I can't resolve.
Has this decision to keep a lot of things to yourself anything to do with the controversial arguments with regard to Jaggi Vasudev, founder of Isha Foundation?
It's a trade off. I will give you both sides of the trade off. Some people tell me that it is important to raise your voice on all issues that are of high attention in society. Because there are very few people who are able to speak fearlessly. When you speak something, you are creating an opening to those who are otherwise scared, reluctant or worried to expose themselves to breach barriers.
Other people tell me that when you are in the opposition you are accountable only to your party, your ideology or yourself. Now you are in government. Your job is to deliver results. That means you have to act in a way that doesn't reduce your ability to deliver results and doesn't distract you from your daily job. I would say I would shift towards the second argument. When I started functioning as a minister I was still having the feeling that I was in the opposition. It took me a while to realise the balance. I have realised that I should avoid issues that are not directly under my control.
But don't you think that when people like you intervene in a debate on such topics that enhances the democratic discourse in the society?
I agree. I have not changed my views. I am not muscled by the office or anything like that. To be fair, my intent was never to raise any Jaggi centric discussion even on day one. They asked me a question and I gave an answer. I gave that interview on the very first day I assumed charge as the FM. It was mainly on my vision and the challenges related to the finance portfolio. Between they asked me about Jaggi Vasudev and I was very clear on my perspective. It remains the same even now. He is a charlatan and gets away because he has money and contacts. There was nothing new in my view about Jaggi. But that journalist chose to run the Jaggi component as the first article and put my views on the financial scenario as the second article. So, it looked that my topmost priority as the FM was to attack some guy, of course, he is a bad guy. But it is not relevant to my portfolio. I am not the Hindu religious endowments minister, I am not the law minister, I am not the social justice minister. There are other people to look after these. That's what I want to make clear.
I should focus on my day job. Of course, my view is my view. But it is not in my interest to express openly every view I have. It is very hard for a sitting FM to have a personal view independent of his or her job. The moment you say something it attaches to your title.
Any other significant lessons?
Two, three major lessons. The first one is that as important as your philosophy, ideology (you exist because of your ideology) it is even more important that you are able to execute what you preach. Just because you have a view or philosophy it doesn't necessarily mean it will be successfully implemented. It requires a different set of skills. There are very few people who are capable of executing the intent. Even someone like the PM, who is otherwise portrayed as a politically strong personality, has not been able to implement the things they promised to do. Things remain as slogans or as things 10% filled. In fact, execution might be the single biggest weakness in government.
The lack of management bandwidth, the lack of execution ability and that starts all the way through the system from contractors, engineers, third parties, litigation everything. Government is a hugely important responsibility and it is one of the most poorly designed organisations that I have seen. It has very little institutional memory, it has almost zero computerisation related to commercial enterprises, very little in the way of organisational design or incentives and discipline. In many ways the structural design of the government itself is highly inefficient and highly archaic so the ability to get things done is very less. Therefore those who get things actually done become super star achievers. The second is that the great curse of democracy is that very few people control the narrative and have access to the ears of the powerful, the decision makers or the politicians or the IAS officers.
So, part of the core responsibility in government in democracy is to strive for greater equality, to have greater universal access to ensure that everybody gets a fair shot, that there is a level playing field. But that is very hard to achieve because once you get to office, once you have a power structure only the loudest and very often people who have the greatest unfair advantage in the system tend to corner the benefits. The large majority, who are the sufferers of inequality, their voice doesn't get heard very often.
Dr BR Ambedkar, the chief architect of our constitution, had the same apprehensions?
The model of democratic government of one person one vote is to break the natural tendency of pure capitalism which will result in greater returns to capital and lower returns to labour, greater conglomerations. If you let a pure capitalist system without the necessary democratic checks and balances then you end up with the Marxian kind of predictions “workers of the world unite,” because the large majority gets disenfranchised with the system. So, it is the core tenet or responsibility of democracy to keep inequality down and provide access to everyone.
Political liberation must result in economic and social emancipation?
Few have the resources and means to reach up to the CM's office everyday. Unless we go searching for the many they won't even reach the lowest level, the deputy secretary's office in the finance department. The rich and powerful will go to any extent to get things done.
The founding leader of your party, Annadurai started on this note. When he became the CM in 1967 his motto was the empowerment of the common man.
But that goal still remains somewhat elusive?
Definitely. It goes back to the justice party, the very notion of social justice and self respect. If you go and look at the memorial at Arinjar Anna you can see his words “Thampi ( brother), go, live among the people. Stay with them, learn from them, build on what they have.” Basically the notion is that politics should be from the people. That is easier to say but harder to do.
The system has its own ways and mechanism to block changes and sustain its own vested interests. How do you manage to break this?
It requires two things. The most important is the political will and the support, which can only come from the CM. There is no way where the minister or the government functions beyond the ambition and intent of the CM. So, if I am able to make any change, the credit goes to the CM. He provides shelter, motivation, support and encouragement. Without that nothing is possible. That is the reality of the political situation. But that is not enough. You need something more. A guy like me has a couple of advantages, why I am able to make even the amount of changes, I am not saying I am deeply satisfied. But look at the last 18 months, we have made profound changes in many areas. One of the reasons that I have been able to do this is that by nature I am a change agent not a statuquoist. It is in my nature to change things for the better. I am able to stay that way because I have both financial and career independence.
I don't need to make a living out of being a minister. I was already well-to-do before I became the minister. If I was not in politics there are many other things I could do. I could go back to a professional career in finance, administration or management. I am not that worried about failing. If I fail I have got other things to do in life.
So far your equations with CM Stalin have been quite wonderful?
I don't want to comment on this publicly except one thing. Again I reiterate what I said in the Assembly. It is because only the CM is there to support and give the kind of guidance and protection that I am able to do anything that I do. You can look at the numbers. Last year we brought down the revenue deficit down to Rs 16,000 crores after spending Rs 20,000 crores more than the plan because of poll promises and covid.
The revenues dropped lower than what my predecessor had budgeted in the interim budget because he had not accounted for the second and third waves of covid. We brought it down Rs 20,000 crores after the revenues dropped about Rs 10,000 crores. Basically it is around Rs 40,000 crore improvement. This year I am on record that we will beat last year's performance. Even though the actual medium term fiscal plan in the budget shows a revenue deficit of Rs 12,000 crores in 2024- 25 I have said that by 2024 my goal is to remove the revenue deficit altogether. If we do that in 24-25 then it will mean that the deterioration in the state's budget happened between 2014 when Ms Jayalalithaa went to jail and 2021 when they handed us power.
That seven, eight year deterioration we will have corrected in three years. That to me is a pretty remarkable achievement. But that is not the main achievement from my perspective. You can't get better results without improving something. You can't do the same process and get better results. I would say that the great joy, success, happiness and to some measure pride in my work is that we are improving the methodology, we are improving the system, the process, the guidelines, the risk management, the infrastructure of managing finances of the state.We are changing the financial administration for a state govt.
I told Manmohan Singh when I met him for the first time that my own ambition is that I should leave a much better system than I got. When I go there should be some permanent improvement in the capacity of the finance dept of TN compared to when I came. It shouldn't depend on having an ex banker and ex MIT topper. It should be structurally different so that whoever sits in this seat can do a better job than his predecessor.
I remember that you had stated in an interview that there are three key areas where the FM should focus. Controlling inflation, expediting growth and creating more jobs. How has been your experience in these so far?
I am not against the theory that the government can drive the economy. There is this whole philosophical debate about the power of a central bank. Let us start from that Reserve Bank, US federal reserve, Bank of England or European central bank. Now we know for sure that central banks are a lot more effective at controlling inflation than they are at promoting growth. Because 15 years of unprecedented loose monetary policies like never before pumping out trillions of dollars of liquidity under the notion of quantitative easing doing all these kinds of things couldn't drive growth. After the global financial crisis till the pandemic we were effectively in the doldrums at the global economy level.
So it is true that monitoring policy is much more effective as an inflation fighter than as a growth promoter. The same way I would say the role of the govt is much better as an enabler of growth, and even more in a negative way if you run a bad government with a bad fiscal policy and a lot of debt around you are going to ruin the economy because you are removing the infrastructure on which the private enterprises build. Bad outcomes are much more driven by the government than private players. Good outcomes on the other hand are much more driven by the market as long as the government provides the right kind of platforms.
It is really the job of the government to provide the framework in which growth is accelerated.Getting well fed, highly educated, high per capita productivity labour force you have. Provide more efficient mechanisms of delivery, more stringent laws and regulations to avoid poisonous stuff and environmental damage. The government does a fantastic job as an enabler of growth. The creation has to come from the private enterprises. It is the government's job to create the ecosystem and sustain the same.
There is an observation that the state should intervene in the market to ensure fair play. The Jayalalithaa government intervened in the market with Amma Salt, Amma cement. It was touted as the return of the state. What is your take?
Yeah. If there is a broken market, if there is a cartel, if there is an oligopoly, monopoly, if there is an inefficient or distorted market outcome then I believe the State has a duty to correct it. For example at the national level I would say it is not in the interest of the nation that two or three large industrial houses should control the bulk of the economy. That means we have an inefficient market. There of course, the government must intervene. But under normal circumstances it is a difficult question. Because as per the CAG's report the borrowing costs of TN is roughly about 8%. Our return on equities in our PSUs is 0.8%. There is no great track record in general of govts being to do efficient business. So I would say if it is core public goods and services, if it is something that requires a not profit motive the govt is better in handling these things.
Think of the end user, the last mile general public, the bulk of the benefits of govt subsidies goes to middlemen. Your intent is to benefit the 8 crore people of TN but when you look at the outcome it might have only benefitted a few lakhs in the middle at the expense of the 8 crore people. If I pump the water through here does it actually reach the end of the line?
And what about job creation?
I think the role of the government is much more in making people job ready, getting them the right skill, the right capacity to be employable. I noticed a profound difference in Kerala when I made a visit to Kochi recently. The service sectors have more Malayalees. But in TN we have more north Indians , the migrant labourers in these sectors. This is just a day's observation. So, don't take it too deeply. So I asked myself and I don't know the answer. I just want to figure out what percentage of this is because the wage structure in Kerala is more efficient so people get better wages. It could also be that there are not enough manufacturing and other kinds of jobs TN specialises in so that local talent is more in the service sector than in the manufacturing sector.
It could also be that the nature of the education system is also different. TN has a greater number of enrollment in traditional degrees. Gross enrollment ratio in formal education at graduate level is some 52% and in Kerala it is 36-38%. Maybe people are more adapted to the work force immediately and able to do it. I can't tell.
There is an apprehension in Kerala that more and more of youth are going abroad in pursuit of education and jobs?
That is different. That happens everywhere. But I think the job of the government is to produce high productivity people with the right skills that the economy demands. In TN, we have one of the highest doctor patient ratio in the country. We have more doctors to patient ratio in TN than in the US.But now we are seeing the opposite side to it. We are in the middle of building 11 new medical colleges. We are finding that we can't afford these many doctors in TN.
We already have a relative surplus of doctors. Unless we see a huge exodus to other states and other countries the outcoming doctors may not get competitive wages. Some may do very well. But many are suffering badly. So we may have reached a saturation point in the ratio of doctors. Particularly in the context of declining population.We have a fertility rate of 1.6. So we have got to be careful to match the skills that we develop to the needs of the economy. And that kind of exercise has not been done before. Now TN has started this new initiative called ' Nan Muthalvan'. It is a general kind of work readiness plus work ethics plus career counselling plus some training programmes. This is the first year. And we have started seeing some interesting results.
You have mentioned the declining population. That brings us to another area of major concern. The southern states are witnessing remarkable decline in population because of the success in family planning and better health care. But this seems to backfire vis a vis the central govt's move to allocate more Lok Sabha seats to the North Indian states taking into consideration the growth in population. The freeze on the allocation will cease to exist in 2026. The South VS North is something being debated these days. How do you look at this issue?
This is a very complex issue. It is a matter of serious concern. I don't know if the central government is really concerned about it. If I were in the central government, I would be concerned. One way to resolve all these problems is to go the way the most democratic and developed countries in the world go. That is basically to greatly devolve the powers of the union government to the states. If the union is only responsible for the foreign policy, currency management, international trade, and defence then I think it doesn't matter what the ratio of representation is. We are all one country. I don't want a different outcome than what the person in UP wants or the person in Gujarat wants. We all want India to be strong and successful, the currency to be stable and to have global trade opportunities.
Once you start running programmes that the most developed and advancing countries are implementing at the local level from Delhi then you start worrying about the ratio of representation. Because population wise the Northern states have advantages. Almost two thirds of the Lok Sabha seats come from the North. At that point people start asking about the fairness of the system when one feels that one is punished for the progress one has achieved. If the union govt keeps to it all the powers based on the numbers in Lok Sabha that will mean disenfranchising the people in South.
You mean to say that the union govt has to promote cooperative federalism and be more democratic in wielding powers?
Yeah.The union govt must involve a lot more powers to the states including the power of direct taxation as it is in other countries. Even the most communist country in the world like China and the most capitalist country in the world like America have much greater devolution of powers to the states, to the counties or districts or the panchayath. We are the only country in the world where it is so centralised even though the constitution framers in the preamble said India is a union of states.
The Constitution reflected the fear of the times. There were apprehensions if India would remain a united country in the absence of a strong centre given the fact that the country was carved out of millenia of different cultures and cemented as a nation. That outcome has been achieved and we are a strong nation now. But it was at the cost of huge inefficiencies, disparities and huge conflicts because the union government is way too powerful and large in the scale of administration by any reasonable standards, any global standard or by any logic.
So, in this particular context the 2024 Lok Sabha elections appear to be really decisive?
Every election is in some way a make or break election. But in my view, if the current scenario persists there are many different ways it can change, I am not saying it can change only in one particular way. If the current scenario where two individuals effectively running the government and all institutions subjugated to them persists then I think it bodes very very badly for the future of our democracy. But you know most people, most propagandists would make you believe that appears to be the default outcome. I completely disagree. There is an old adage that a week is a lifetime in politics. We still have about 65 to 70 weeks to go. So it's like 70 lifetimes in politics.
Many things can change. Things can change anytime. For example, I was at the meeting of the finance ministers of the states in Delhi 10 days ago. And I was pleasantly shocked to hear BJP ruled states complaining about lack of financial assistance from the centre. Earlier only Kerala and TN used to make such complaints. This meeting I was pleasantly surprised that CMs and finance ministers of major BJP govts like Maharashtra, UP, Madhya Pradesh, raised the same question. They ask the centre why you are depriving the states of their rights and money and you are intruding into our administration. I was really surprised to see the BJP ruled states raising the concerns of the people instead of bowing and genuflecting to the leadership in Delhi.
That means there comes a point when you can't simply run away from reality?
I think that is true for all of us. Nothing lasts forever and the truth will triumph ultimately. But the question is after how long and after inflicting how much damage.
In journalism there is a saying that the editor always keeps the letter of resignation in his pocket. When it comes to a tipping point or when everything comes to a standstill, he will be ready to resign. Do you think that you need to carry such a letter in your pocket?
No. I am one of the few people who came late into politics and cannot afford to go earlier. The operative words are afford to not want to. Because the work I am doing now is more meaningful and satisfying and impactful than any work I have ever done in my life. I am a thousand percent sure of two things. One, I could live a much easier, much more financially plush, global executive, investor or banker life than I do now. But, I am also thousand percent sure that there is nothing else I have done or will ever do in my life outside public service that will give me this kind of satisfaction and sense of purpose in my life. So, in that sense I will strive to do as much as I can, say, be as flexible and bend as much as I have to without breaking my principles within that realm. I am here to continue and push through.