Economy of Tamil Nadu

India is a large country of different peoples, cultures, languages and landscapes. As a country with a quasi-federal structure of Governance, a lot of the successes and failures of state governance and economies can be attributed to state specific socio-economic contexts and policies.

For decades, Tamil Nadu has consistently performed above national averages for Social and Economic indicators and is today the 2^nd largest economy in the country after Maharashtra.^[22][23]These successes are impossible to discuss without acknowledging the unique Political Economy of the state as most of the growth seen by Tamil Nadu happened after national political parties lost relevance in the state and were replaced by local Dravidian Parties. Since the 1967 legislative assembly election in Tamil Nadu, the state has been ruled either by the DMK or its offshoot and rival, the AIADMK. Today, the 2 large Dravidian parties, the DMK and AIADMK together control 199 seats out of the 234 seats in the Tamil Nadu Legislative Assembly.^[24]

In the 1960s, TN was lagging behind the Indian average in many socio-economic indicators. It’s Urban and Rural poverty rates were worse than the pan-Indian average but as of 2011-12, poverty rates had come down to 6.5 percent, 3^rd lowest among major states and lower than the economically important states of Maharashtra and Gujarat.^[25] While Tamil Nadu, along with Maharashtra and Gujarat is among the most industrialised states in India, what makes Tamil Nadu distinct is the labour-intensive, spatially and socially inclusive nature of its industrialisation, drawing a greater share of its population away from Agriculture.^[25]

The growth of Tamil Nadu can be attributed to the unique development of the state’s socio-political sphere. During the British rule of India, the territory of what is today Tamil Nadu was a part of the Madras Province.

Through scriptural sanction of Caste Hierarchy, the Brahmin community held a hegemonic position in South and Western India, unlike in other parts of the country. The colonial state opened up new spaces of mobility for local elites, through modern education. This led to engagement with the state and the formation of a thin civil society. The dominance of caste elites continued as their position in the caste hierarchy was accompanied by their entry into positions of power in the colonial bureaucracy, though they had to give up some orthodox practices. Colonialism also brought ideas of modernity that allowed for contestations of the terms on which colonial power was exercised. This led to the formation of the Justice party, to represent non-brahmin interests.^[25]

Rationalist literature was used for the critique of Social power in a caste society. The caste elites drew support from western orientalists and Theosophists like Annie Basant who saw eastern spiritual traditions to be more sophisticated, and went on to promote and privilege native religious traditions that upheld caste hierarchies and caste based division of labour. Rationalists however criticised practices that justified inequality and unscientific beliefs. The Hindu Freethought society, later renamed to the Madras Secular society published journals in English and Tamil that carried critical news and discussions on latest scientific discoveries and implications for religious beliefs and practices. Many published articles engaged with what was seen as the irrational basis of Christianity and Hinduism. Many articles also questioned restrictions on women, the validity of child marriage, ban on widow remarriage, caste hierarchies and exploitative relations between the upper and lower castes. They called for new ethics based on the principles of Liberty, Equality and modern Rationality rather than rely on old scriptures.^[25]

In a context where claims of religions were being evaluated through rationalist parameters, the dominance of caste elites could no longer be maintained through faith alone and thus, they began validating their practices through scientific logic. Untouchability for example was justified on the basis of Hygiene. The caste system was validated in terms of a natural division of labour that aided production and specialisation. Eugenics were used to argue for the ideas of ‘innate supremacy’ of caste elites. Simultaneously, there were also efforts to establish an equivalence between the culture of caste elites and the Indian nationalist culture. As the upper castes dominated the professional and administrative elites, efforts to conceptualise a tradition and culture that was ‘Indian’ was by default traditions that upheld caste privileges. The caste elites drew upon Material produced by orientalists like Max Muller, in addition to Theosophists like Annie Basant. The Orientalists saw in the Vedas and other Sanskrit texts, the essence of Indian civilisation, and this was crucial to the caste elites’ imagination of what was authentically Indian and ‘national’. Muller wrote that threats to this ‘Indian’ culture came from inferior people inhabiting the sub-continent who corresponded to lower caste ‘non-Aryans’. The combination of Orientalist and Theosophist constructions of ‘authentic Indian culture’ reinforced the Brahmin claim for superiority in the Caste hierarchy and their social practices as the core of an ‘Indian National Tradition’. Therefore, the elevation of Sanskrit and Vedic traditions as ‘Indian national traditions’ was seen to simultaneously emaciate other cultural tradition and languages – Tamil in the context of the Madras Province.^[25]

The power held by Caste elites in the cultural-ideological sphere was combined with the securing of power in the Material Domain as well. At the turn of the 20^th century, upper castes held a disproportionately large share of seats in Higher education and Jobs in the colonial administration. Lawyers from upper castes, as arbitrators of claims over property, amassed considerable wealth and power. Thus, the monopolies held by the upper castes helped them reinforce ideas of the natural superiority of their intelligence over other castes and of their caste status. Since the domain of formal politics operated on the terms set by Colonialism, the upper castes were able to exercise disproportionate control and could effectively combine their hegemony over cultural and material domains. They thus inscribed their authority by forging links between a ‘Hindu’ past and an ‘national’ culture and combining it with power in the material domain through control over bureaucracy and Judiciary. They used courts and legislature to preserve ‘Hindu’ practices, and hence perpetuate their dominance across domains.^[25]The following table shows the distribution of selected jobs among different caste groups in 1912 in Madras Presidency.^[26]  

It is this context of upper caste hegemony that gave rise to Dravidian politics. The Hindu-India-Sanskrit spheres that sustained Caste elites dominance in the material and social domains is what the Dravidian movement sought to undermine through espousing a new chain of equivalence: Dravidian-Tamil. The discovery of a wealth of ancient Tamil and ancient Dravidian language literature, along with the discovery of the independent origin of Dravidian languages from Sanskrit, further helped build a counter-narrative.^[25]

In the material domain, the colonial sphere opened up opportunities, albeit unequal, for non-brahmin elites. At the turn of the 20^th century, Brahmin dominance in this sphere began to be questioned and countered by these elites, with their focus primarily around the greater share of opportunities opened up by Colonialism. In 1916, the South Indian People’s Association was founded to publish newspapers and the South Indian Liberal Federation was founded as a political association that was renamed into the Justice Party a year later. The Association released a manifesto questioning the oligarchic control over education and employment in public administration by Brahmins and demanding a rightful share of employment and education for all community. Following the Montagu-Chelmsford reforms, limited franchise elections were held in Madras Province and the Justice party formed the Government from 1921-to 1926, and then after a break, again till 1930. They passed landmark legislation such as communal representation on employment, noon meals for children in Madras city and Government control over Temple funds. Legislation emphasising Education, Health and communal representation resonated with subsequent developmental interventions.^[25]

Ideologues of the Justice party and subsequently, the Self-Respect Movement (SRM) under Periyar, arguably the most important ideologue of Dravidian politics, emphasised productive versus unproductive castes dichotomy to reveal the exploitative nature of caste relations and hierarchy. They pointed out that despite wealth being generated by non-Brahmin productive castes, it was appropriated by the Brahmins via temples or when they had to rely on Brahmins for legal counsel and support. The fact that Brahmins also controlled vast tracts of fertile lands through temples, furthered this sense of domination. They called for a technical education that would further Productive Industrial development rather than an education that produced clerks who were seen to add little value to Society.^[25]

Though the SRM was appreciative of the efforts of the Justice party, Periyar pointed out that the domination of Brahmins became visible to the ideologues of the party only when they occupied positions of power in the Colonial administration, while they failed to recognise the Brahmanical power that permeates the Cultural and Social domains, conceding their privileged role in Religious rituals and practices. In other words, they wanted to replace Brahmin elites with another set of elites or broad base the social composition of elites. Critiquing the primary focus on acquiring a share of government jobs, Periyar asked what would such an agenda mean for the common people who would continue to labour through their lives and supplicate for material and spiritual favors due to their beliefs. Referring to the upper caste status of many Justice party leaders, he emphasised that non-Brahmins, being over 90 percent of the population, couldn’t be represented by 5 percent who were Kings and Zamindars (Landlords). The Justice party did not see caste in relational terms but as a separate non-Brahmin group that is trying to compete with Brahmins. Such an approach fails to see that claim to ‘Brahminhood’ also creates a corresponding ‘Shudrahood’ and ‘Panchamahood’. Claims to superiority simultaneously inferiorise others, and this claim was made through religion. Periyar argued that the most important dimension of being Human, and what distinguishes them from Animals is the sense of dignity (maanam) that can only come from self-respect (suya-mariyadhai). He also emphasises experiential equality as fundamental to the idea of Equality. Only when people share a similar experience can they develop a sense of fraternity and belonging. By combining the domain of the material and cultural-ideological, upper-caste hegemony denies the possibility of both experiential and material equality, and hence any degree of self-respect. He therefore articulated a demand for ‘equal rights’ that can be claimed by all and that this was the basis on which democracy ought to be imagined. It is the upper caste valorisation of Sanskrit and construction of practices and traditions that privileged their status, which has managed to sustain a hierarchical society and deny self-respect to the subaltern castes.^[25]

Therefore, unlike the Justice Party, the SRM was clear that the demand for communal representation was not merely about the redistribution of jobs and power in the modern economy, but was a demand meant to erode the power of Caste elites, and therefore make way for the democratisation of social values and realisation of self-respect. Access to jobs would be helpful but are not an end in itself. Another important shift in the politics of the SRM was its transformation into a mass-movement, that began to draw in various subaltern communities and caste groups over a period of time. The Dravidian movement could link the diverse critiques of the caste system and ways of upholding caste hierarchies and division of labour including Saivite, Dalit, Socialist and Rationalist critiques into a common frontier, and imagine a politics that could aggregate these demands. Ideologues of the Dravidian movement held that the caste based division of labour not only generated social inequality but most importantly denied economic opportunities to the lower castes as it tied them to traditional occupations that were deemed inferior. A move away from demeaning physical labour marked by inferiorised caste identities, and entry into modern occupations that were less marked by caste, was therefore seen as important. Periyar also pointed out the inefficiencies inherent in traditional artisanal production and called for incorporation of modern production technologies that can render menial, ritually marked labour, redundant. On the question of exploitation of labour, he makes a distinction between the ‘caste-labourer’ and the ‘wage-labourer’ even as he seeks to bring them together under the Dravidian fold.^[25] C.N. Annadurai, another important idealogue of the Dravidian movement and the founder of the Dravida Munnetra Kazhagam (DMK), a Dravidian party founded in 1949 and sought to enter electoral politics, also emphasized the dual identity of the worker. In his book, Panathottam, during a strike by textile-mill workers, he calls upon his party members to communicate with other poor people, the reasons behind the protests of the mill workers. They are Dravidians too like the rest of Tamils, he says, and hence it is important that people realise how their fellow man is being oppressed. He further points out that for the worker, all he knows is the struggle in his life. To him, all the Aryan-Dravidian divide may seem like a lot of noise. But, we (party members) know both. It is therefore understandable that they may forget about us but it is an unpardonable crime if we forget them.^[25]

Another key aspect of Dravidian politics is the regional dimension, and freedom from domination exercised through networks of pan-Indian power. As caste elites sought legitimacy through the nationalist movement by inscribing their culture into the national, the Dravidian movement sought to build on the critiques of this tradition through a call for an alternative society that could be realised by mutual respect and solidarity. Given the interlocking of the socio-economic domination by the upper castes, with domination of capital accumulation by mercantile elite at the pan-Indian level, this alternative society could only be realised at the sub-national level. This imagined community would not be based on an appeal to ethnicity but to a community of the oppressed, be it terms of caste, gender, language, race, ethnicity or religion. While Periyar did not believe in territorial nationalism, the Dravidian movement did hold that it’s vision of Social Justice could only be secured through regional autonomy and Federalism, which has become major agenda of Dravidian parties.^[25]

The Dravidian movement, through its appeal to the Dravidian-Tamil identity thus built a Dravidian ‘common-sense’ that spoke to these groups simultaneously even though some groups may have adversarial relations with each other. The components of that ‘common-sense’ and the pillars of Dravidian politics may be identified as:^[25]

• The necessity of Caste based reservations (affirmative action)

• Recognition of the importance of a Productivist ethos

• Broad basing of mobility into the modern economy

• Regional autonomy and an anti-Hindi stance due its ties with Sanskrit which has links to scriptural sanction of caste and gender hierarchies and hence its association with a denial of substantial democracy.

Democratising access to modern education and employment in the modern economy was seen as the key to undermine caste relations of hierarchy, as it opens up possibilities to move away from caste-inscribed labour. Movement from rural to urban too, was seen as a movement from ‘pre-modern’ time- spaces ridden with caste and gender hierarchies, where work and labour only serve to reproduce identities, to spaces that potentially allow for new mobilities, economic and social. While the Dravidian movement did recognise the importance of economic-asset-based inequality and economic-asset based inequality and economic exploitation of labouring classes by capitalists and land-owning classes, emphasis was placed more on relations of power emanating from caste-based division of labour.^[25]

Affirmative action policies not only enable equality of opportunity but are also redistributive measures given the scarcity of public goods such as higher education or secure, well paid employment. Unlike traditional left mobilization, like in West Bengal under the rule of CPI(M), that saw land reform as the axis of redistributive politics, Dravidian mobilization privileged undermining of status-based power by broad basing access to education and non-farm jobs as important pathways to mobility without discounting the role of landed power.^[27] Periyar believed that redistribution of property without abolition of caste-based privileges is unlikely to lead to an egalitarian system due to the entrenched power of the caste elites. Redistribution of economic assets at one point in time without ensuring a sense of self respect, will only lead to assets going back to the upper castes. He used the example of lawyers appropriating lands from traditional land owners to drive home this point. This vision of social justice thus tied to inclusive modernization, and to the developmental logic of structural transformation. Justice is therefore linked to the ability to transform the economy from a predominantly agrarian economy marked by poor returns, low productivity and caste rigidities to a structurally diversified and modernized one.^[25]

It is important to elaborate the view the Dravidian movement held towards capital accumulation. As structural transformation and modernisation could not take place without capital accumulation, the Dravidian ideologues were not antagonistic to it, though there was a call for a strong public sector and for the strengthening of cooperatives. They envisioned a democratisation of the accumulation process and privileged the role of regional capital as opposed to the mercantile big business groups from the north that wielded control in the Presidency and also wrested most concessions from the government. In Annadurai’s Panathottam, he asserts that manufacturing is the lifeline of any country, he contends that the reason for the state’s backwardness was essentially the absence of state support for modern industrialisation. He goes on to accuse the Congress government (then in power in Tamil Nadu) of not being able to tap into the region’s geo-economic potential at the centre of the Indian ocean, by failing to establish any economic links with South East Asia (1949: p. 25). He further laments the siphoning of savings from the state through the banking system to fund the accumulation of elite north indian business communities. This position against north Indian big business was accompanied by a demand for public ownership of industries, and encouragement of local capital.^[25]

The Dravidian parties have a history of populist policy making in Tamil Nadu. Populism was arguably institutionalised by the Dravidian parties in the state. Populist policies in the state can be split into two broad domains: the ‘Social popular’ and ‘Economic popular’. Social popular policy interventions were rights-based interventions such as ensuring inclusive access to public goods such as education and health, inclusive access to modern sectors, the beureaucracy and organized sector employment. These processes ensured the rights of the excluded such as lower castes and women, in order to undermine the underlying social basis for generating unequal outcomes in the long run. Social popular interventions have a long-term programmatic commitment and seek to address the basis of Social backwardness such as caste and gender hierarchies. While social popular policies attempt to democratise power and access, ‘economic popular’ policies are rooted in patronage and emanate through governmental imperatives. Economic popular policies seek to address specific grievances of specific groups. While Social popular policies works on a populist logic of equivalence, economic popular policies largely operates on a differential logic of governability. The ‘Social popular’ interventions adopt longer timescales as they confront the factors that reproduce social domination, while the ‘economic popular’ interventions follows the temporality of the election cycle, tending to generate interventions that depoliticise poverty. While the former seeks to enable the social basis for change, the latter seeks to be status quoist. Therefore, Social and Econmic popular policies can be differentiated by both their intent and content. But, outcomes from both the domains are likely to overlap, with economic popular policies mobilising groups on a social popular agenda. When populism was insitutionalised through the capture of state power by Dravidian politics, three broad domains were transformed.^[25]

1. It laid basic foundations for structural transformation through investments in Economic and Social infrastructure.
2. It democratised state institutions including the bureaucracy and access to Education.
3. It managed to build a confident people and electorate with a broad based ‘capacity to aspire’ and demand.

While social popular interventions could redistribute assets like human capital, economic popular interventions can also be socially empowering such as the provision of free school meals for children or bicycles for girls attending high school.

Let us take the example of policies meant to empower women in Tamil Nadu, to observe how similar interventions can be distinguished by their Popular logic. The DMK brought an amendment to the Hindu Succession Act that ensured equal shares for women in ancestral property. Along with this, the party also brought in schemes to support marriages of Inter-caste couples and remarriages of widows as incentives to undermine caste and gender hierarchies, in line with the interpretation of feminism by the Self respect movement. Though these schemes were rooted in the normative ideals of social justice and located in the domain of Social popular, they did not translate into electoral dividends. Later, the AIADMK, an offshoot and electoral rival of the DMK, introduced a scheme that offered four grams of Gold and up to INR 50,000 to poor women for marriage if they had completed a degree or diploma. Though it was aimed at incentivizing girl students to pursue higher education before marriage, it was designed more as a clientelist scheme. While both types of schemes share welfare content, the former is located within a narrative of gender and caste justice whereas the latter assumes the form of patronage. While the social popular policies laid the foundation for economic transformation that became visible in the 90s, such transformative policies were not always helpful electorally. Over time, potential for social popular intervention reaches a limit and its capacity to build electoral support. For example, universalisation of primary education once achieved, exhausts its electoral appeal. As social popular exhausts its potential, the economic popular assumes importance due to immediate electoral compulsions.^[25]

Today Tamil Nadu is among the states with the best educational outcomes. The state has high levels of literacy across social groups and nearly 50 percent of youth finishing school enter tertiary education. This can be attributed to ‘Social popular’ policies, that has universalized primary education and affirmative action in higher education, while ‘economic popular’ policies like free school meals, group specific economic incentives and subsidies that reduce the cost of education has played supplementary role. Today, Tamil Nadu has one of the best indices of infrastructure for Primary schools such as electricity, drinking water and separate toilets for girls. It also has a lower pupil-student ratio than the Indian average. NITI Aayog's school education quality index ranks Tamil Nadu along with Kerala as having the best school education in the country based on 30 indicators.^[25]

There exists an elite bias in the provision of public services such as health and education in India. Throughout India, higher and technical education, up till the 80s were developed at the expense of basic education. This bias meant that higher education continued to be the preserve of upper classes and castes, widening the divide in access to higher education, as lower classes and castes couldn't catch up and be represented in higher education due to the abysmal status of primary education. But socio-political changes in Tamil Nadu allowed it to buck this trend since there were heavy investments into universal primary education in the state until it was deemed sufficiently developed. Investments were then targeted at developing secondary education and then tertiary education.^[25]

Though the state ranks only eighth in terms of per-capita expenditure on education, the quality and composition of the expenditure has made a difference. As mentioned previously, the state has steadily shifted its priority from primary to higher levels of education to match growing demand. In 1955-56, 70% of Tamil Nadu's educational expenditure was on primary education, coming down to 52 percent in 1980-81, while share of secondary education went from 20 to 29 percent and share of tertiary education going from 11 to 19 percent. Efficient public expenditure implies lesser expense to households. According to the 2014 national sample survey, the average expenditure of a senior secondary school student in Tamil Nadu was INR 2862, less than half of the Indian average of INR 6916, while an upper primary student in the state pays INR 1518 with the Indian average at INR 2171. The lower expenditure is a result of financial incentives that ensure children from less privileged backgrounds enter schools. We must not forget that the positive outcome in education is a result of a near century long mobilisation for equal access to education, allowing people to escape poverty and enter the modern economy. The state has also focused on inclusivity in higher education. There exists an extensive affirmative action program to ensure pupil from all communities are represented at tertiary education.^[25]