|Saturday, 14 May 2011 00:00|
Looking for a central message across so many disparate states is always tricky, and in this case the results have also been quite different. Both Mamata Banerjee and J Jayalalithaa’s clean sweeps have been accompanied by a massive increase in vote share; in Kerala, both fronts saw an increase in vote share, but the Congress-led UDF won by a one percentage point higher vote share that translated into 4 extra seats.The Congress did spectacularly in Assam in terms of vote share and seats, the peace in the state contributing to a consistent rise in GDP growth rates (3.4% in 2005-06 to 8.1% in 2009-10). The two central themes that suggest themselves for all states are complacency and corruption. With West Bengal’s growth among the lowest in the country (at 7.4% p.a. in the last 4 years, only Rajasthan and UP delivered poorer growth among the big states) and its financial position deteriorating as a result of the poor growth (at 4.1%, its own-tax-revenues to GSDP are even lower than Assam’s 5.1%), complacency was the Left’s leitmotif. The state’s finance’s also deteriorated (see lead column today), so much that interest outgo eats up a fifth of the annual budget. It underlines just how long Mamata’s haul will be.
Thanks to the DMK’s industry-friendly image, high-profile investments in the state have risen over the years, and so has growth—at 8.8% p.a. in the last four years, this was the fastest among the states who elected new governments yesterday. While Dayanidhi Maran was telecom minister at the Centre, he ensured many telecom firms (Nokia comes to mind immediately) set up base in Tamil Nadu (under Jayalalithaa at that time); later, when the DMK came to power in Tamil Nadu, a host of automobile firms flocked to it. All of which would suggest, despite what media reports and opinion polls suggested (each one got it wrong for Tamil Nadu!), corruption was a far bigger issue than was initially imagined, including in rural areas. Though Tamil Nadu’s average growth was respectable (it was lower than Gujarat, Orissa, Maharashtra and Bihar), it slowed significantly in 2007-08 and 2008-09. This may also have played a role in the DMK rout.
Going ahead, the picture is cloudy. There is no threat to the central government, if anything the DMK will likely be even more dependent upon the Congress. The question is what happens to reforms, the process of running government and attracting investment both at the Centre and the states. Mamata Banerjee remains opposed to the land acquisition Bill, though she might be a bit more cooperative, given the fiscal mess the state is in; on the other hand, she could be more aware of what land acquisition did to the Left’s fortunes in Singur and Nandigram, and choose to dig in. Certainly, land acquisition will end up being the biggest football/hot potato over the short term. As for other reforms, the post-PAC standoff between the BJP and the UPA is bad news. At the level of the states, Mamata needs to prove her credentials to industry though the relief of seeing the Left out will be a big plus. Jayalalithaa has an image of being aloof, and industry would be wary, but she is unlikely to upset the investment surge in the state.