Dr PTR Palanivel Thiaga Rajan’s Podcast with Puram Politics

Published Date: December 11, 2018

Your grandfather was Chief Minister of Madras State, your father was Speaker of the Tamilnadu Assembly and you were an academic. What made you move into politics? Because and I ask you this not from a conventional tone but like as an individual, weren't you better off writing or solving problems of optimization, what is the pull towards politics in terminal?  

That's a very good question. Actually I'll go back a little bit.

My great-grandfather or rather my great grand uncle was kind of the guardian of the joint family because my own great-grandfather died young. He was one of the founding subscribers of the South Indian Liberal Federation, the precursor to the Justice party back in 1916.  So at some level, the values of the movement and when I say the movement I mean the original Justice party, social justice kind of developmental mortal type of movement have been ingrained in me from from birth and in that sense I'm actually a fourth generation Dravidian politician, though a 3rd generation elected one. When my great-grand until have the chance to run for the Legislative Council in 1920 in the under the Montague Chelmsford reforms he declined and passed it on to his own nephew because he felt that a Oxbridge educated kind of barrister was the appropriate representative for the people so my grandfather was the first elected representative both pre independence and post-independence he was an MLA and 19:52 assembly and my father was and then me I'm an only child and so at some point I think while growing up it was ingrained in me that like my forefathers before me because we had been born well off we were landed and they had been for many generations before my great-grandfather even that it was our obligation to put back into society and you know without any siblings I had nobody to shift that burden on so I think for me it was not a question of why but when and of course you know in the early days I was a reluctant kind of expected I didn't understand the world I'd grown up kind of in a cocoon and so my father forced me to go overseas as a graduate student once I went there I realized that a I love to learn at least in in a more Western model of learning where it was more creative and more individual rather than brought learning as I had been used to in India and be that the the downsides of being nobody of being anonymous were significantly lower than the upsides of being anonymous you know all my life I'd lived in the public eye because of my family and my legacy and so I really enjoyed it and I found every means possible to prolong it and then not come back so in the end I was only in academics for about ten years after I left here or even slightly less I did many other things I was in consulting you know I did a bunch of work in the banking industry and and I kept pushing off when I would return I had multiple opportunities different circumstances or rows good ones bad ones for example and my father died the then leader of a party calling it offered me the opportunity to come and run in his seat and join the cabinet and due to various circumstances at the time I couldn't do it my wife was pregnant my oldest son was one year old she was reluctant to come to India for the delivery you know we had other issues so anyway long story short I think when I did come to politics it was the sixth kind of I don't know how you call it sixth false start became the true start or six discussion led to the actual execution so for me I was always going to come back and the only question was when and you know things work out the way they do so I came in 2060 so let me stop you there and ask you so you have come into politics with this motivation of a long family legacy what is your individual motivation is there like a policy proposal or a vision of society that motivates you to be in politics yeah I think you know service in general is I think in the blood but of course then the question is what are the values and what are the kind of impacts that you hope to have as an individual I would say the principles in my mind remain unchanged you know going back to the founding of the Justice Party more just socially and inclusive financially and you know equality of opportunity society that provides for the upliftment of all those principles remain unchanged and and they are the motivators even today I wrote an essay about two years ago about it almost two years ago was the hundredth anniversary of the founding of the justice party and I wrote an essay which was published in the Morrison in our party's newspaper and then became kind of the theme of the centenary celebrations that our leader threw Stalin organized and you know it said looking back with gratitude and looking ahead with a renewed sense of purpose and in that I say I had said the principles remain the same as my grandfather said actually on the 50th anniversary of the justice party we were chairing it are now organized after becoming Chief Minister of Tamil Nadu and at that speech my grandfather said you know men may come and men may go civilizations you know thrive and then disappear empires rise and fall the justice party as an institution will not live forever but the values it stands for eternal and will never die so those values stay the same the question I asked back two years ago is how do we interpret those values in today's world you know what are the kind of practical structural societal problems that we want to handle and then we address and what are our priorities why do we exist still as a movement in some ways the social justice movement has been reasonably successful in many other ways it is not so I proposed back then I said you know maybe there are four or five ways we can look at it because as a newcomer to politics it was not didn't behoove my position to be the leader of thought but as a proposal I said maybe we reframe the notion of equality and inclusion to include a broader in segment of people like the lever had been doing the the disabled differently-abled the the AIDS inflicted the you know the third gender the the differently preferred communities maybe we redefine what basic quality of life with dignity should be like and that being the aspiration that we need to provide every person life of dignity which includes things like toilet facilities drinking water you know healthy environment things like that the fundamental policy to improve how we manage with the environmental impact of an exploding population and tremendous urbanization what are our solutions to these things and these are extremely specific sort of policy questions and we will get into each one of them as time permits

but the one thing that I wanted to ask you was at least it's been my understanding that the justice party because of its foundational the people who were in its foundational days primarily whom we could call the non-prime an elite right they were while the commitment to social justice was absolute they were also they also had our eye on being business friendly whereas the DMK moved closer to socialism is that a fair characterization or would you disagree with that

actually everybody has a different perspective of course on these things but my own view and it was shaped by a coincidence the coincidence was back in two thousand twelve or thirteen when I was a managing director at Standard Chartered Bank and I was being promoted to a senior managing director there was a Leadership Program in Oxford that Standard Chartered had an agreement with the side business school there and it was called leading across boundaries or something like that something to that effect but it was held partially at Jesus College Oxford which was where my grandfather that studied almost exactly 100 years earlier back in 1912 1913 yeah and I sat in that Chapel and and it was a very emotional visit for me because I went and I realized the circumstances back then was that the world was at war it was the first world war many of the people leaving college or forced to leave college to go fight or volunteering to leave college to go fight were dying you can see the plaques on the wall of all the classmates and then you know contemporaries were died in the war and I remember thinking in a time like that how difficult it must have been to be non-white and non-British to be an Indian and then I started connecting the dots and I said why is it that you know inherently many of the justice party leaders as you say were the non-Brahmin elite bounded by in those days there was not a lot of business maybe there was a lot of training especially certain communities that were trading across the Asian and kind of African roots but it was mostly agriculture yeah that was really the the predominant way to be elite financially was through large landholdings certainly prior to the land ceilings of socialism and so forth so why what did it what motivated such men and they were mostly men few exceptions such men who were born wealthy who had the privilege of many of them being Oxbridge graduates or medical doctors or you know highly qualified people barristers for those at the Inner Temple in London at that time you know the elite kind of barrister training in and what motivated these people who already sitting on the top of society who are the trustees of temples to then come up with agenda that was social justice equality reservation nationalization of temples everything against their personal you know situation like you know it's one thing if I'm the bottom of the pyramid may say I want the pyramid leveled it's another thing for me to sit on top of the pyramid and say I wanted level and something that struck me only after that visit was that having experienced discrimination themselves as they surely must have however you know kind of open-minded and equitable the walls of you know Oxbridge were surely they had to leave college and go to the ins and the pubs and the towns and the streets and even today you can't say that it's a colorblind world so you can imagine what it was like in 1912 or 1910 and I think many of them having experienced that shaped their views right they were libertarian both ways they were libertarian because of the values they learnt in the church run colleges of Oxford and Cambridge which is mostly what they were but they were libertarian because having suffered this kind of discrimination themselves they said if it can happen to me sitting on top of the pyramid at least I have other recourse you know I can buy my way out or I can build a big house and not have to deal with it outside what about the rest of society so it was a very what can I say contradictory situation where people were fighting against their own interests on the surface for societal good and I think that has not been kind of repeated since but going back to your question about business I would never say that they were business friendly because I don't think they really understood business as business there you know the Industrial Revolution had not really reached Indiana other than some you know the British model particularly excluded value-adding industries from coming to India they wanted to take the raw material out and do all the value addition in the home country because that's where they could create the wealth there and so there wasn't a lot of manufacturing there was some and what little of it was there was owned by the British it was not owned I mean at least you had to have a British partner it's very hard to be a purely in this Indian industrialist but I think there were certainly of a mixed economic model in my understanding of their economic model they saw a distinct role for the public sector you know they saw that the government should be the provider of essential services and goods including and up to the free meal scheme which they started in Madras Corporation when they tried to force compulsory education they saw a very big role for the co-operative sector and most people miss that it was the Justice Party government that created a separate ministry in a separate department for cooperation and greatly encouraged cooperative societies you know from unions from workers from you know residents from farmers my grandfather had been the minister for cooperation back in 1920s my grandfather and father both personally served as you know office bearers of cooperative societies like the measurables workers society and so forth and they strongly encouraged the co-operative sector which as you know is in between the state sector and the private sector it is a you know effectively a nonprofit mutual society the co-operative movement was born in the 1800s effectively in Scotland and then eventually we're in the insurance business where they said you know at some level we need to have a mutual society so that risk is shared and at some other level we don't want it to be for profit nobody should benefit from the risk management of others and so this mutual society model for insurance came up and then they found it that after it applied to all kinds of other things like risk bearing and crops risk bearing in supply procurement risk bearing in house finance etc. etc. so there was a very big push on the co-operative sector in the Justice Party government and then of course they always felt that there was going to have to be private sector development because the motivation of human beings for profit just could not be replicated in government or in the co-operative sector and at some level that was an essential component of economic activity going back to Adam Smith each man acting in his own interest gives you the most efficient outcome

where do you draw a line between that line of thinking and the DMK K's current sort of economic policy I ask you this because quite often we see a discourse from Delhi accusing both Dravidian parties of fiscal profligacy without realizing what the effect of social schemes have been but the other side to that coin has also been that that half there has been a you know over the past particularly over the past three or four years the revenue situation in the state has declined quite badly so so what is the DMK case policy now where do you see the situation of Tamilnadu in particular going forward

actually I'd separate there's two different questions I didn't quite answer your question earlier so let me get back to that I don't think there was ever a day that the DMK either under Anna or on data layer killing it or today and has been non kind of Industry friendly in fact if you look back in the 60s right after the DMK government first came was when they held the first trade and manufacturing expo and of the region which then you know that exposition grounds is what became on another right they set up in barren wasteland they created a yearlong exposition international crane and exposition so the notion of foreign trade the notion of production the notion of kind of industrial growth job creation has been close to the heart of the DMK in fact about ten days ago there was a big event organized by the South Indian Chamber of Commerce and Industry as a tribute to a lever calling it in which the top 10 or 12 industrialists of Tamilnadu spoke and all of them talked about how for side how much foresight he had how he helped going back to the 60s with the formation of speak and so forth how he was always a big proponent of industry how he understood the value of industrial kind of output and job creation and so I don't think the government's position on private enterprise has ever changed that much at least you know you might say the DK has a movement we are closer to you know socialism extreme socialism or communism but the DMK at least as far as markets and businesses was concerned I don't think you can point to a you know any poor part of its governance history and say it was anti private enterprise it may have been socialist in different ways but it was never anti private enterprise and it was actually very supportive of private entrepreneurship you know Mr. insinuation of India cement spoke the the Ramco group spoke Mr. AC motor spoke the you know any number of industrialists spoke about how he had gone out of his way and the government had formed policies fenders lasers so I leave that as a separate topic I would not admit that the DMK was at any point not industry friendly or not private enterprise friendly unrelated question in my opinion is the extent to which socialism in the form of freebies or government support or you know supposedly popular schemes has a manifested itself in in government policy and be the consequences of that for the fiscal situation of the state so in that perspective I would say you know a it is very hard to easily categorize all freebies or all socialist welfare measures as kind of financially profligate how irresponsible I made the statement on behalf of the DMK I presented before the 15 Finance Commission when it appeared here and I said I personally have a view that there are at least three or four types of freebies there are freebies like the noon meal scheme which from an accounting policy we count as you know current year revenue expenditure but in fact in my opinion is capital investment into the development of human beings there are schemes like giving you know laptops to college students or cycles to you know school students or so forth which again I would can consider in policy terms as investments in the future rather than they are counting you know model of revenue expenses I would even go so far as to say there are schemes in the insurance space like health insurance or for that matter marriage assistance because as you know in developmental economics when we study this we say it's one thing to lift a man or a society or a family up from this level to this level it's another thing to keep them there and very often what doesn't keep them there is unforeseen events or in some cases for seem large ticket events like a wedding expense right of course everybody knows they're going to have to spend on the wedding but how does a daily wage worker or you know or 20,000 rupee a month employee especially in the country where the banking system is not that efficient and access to credit is not good certainly unsecured credit is almost not available in the system you have to go to moneylenders in that kind of society a wedding can be something that sets you back a decade right you have to spend two or three likes you don't have that kind of money borrow the interest rates are you serious and then you end up paying that for the next five years at any so even the marriage assistance schemes I would say social welfare measures that provide insurance from falling behind once you have reached a certain stage then personally I can look at many schemes and say either they're just unimplemented or badly designed or should never be touched in the first place and I'll give you like three or four examples right just because we're talking in detail MA to me the Rural Employment Guarantee Scheme is a fantastic scheme if you actually make sure that some productive work happens for the salary that is given of course you want to give minimum is equal to having a minimum kind of you know income you know in a different way but were you to give that income when they did no work you are in the technical definition of the sense creating inflation because you have pump more money into the system for zero increased productivity that is the definition of inflation in fact more money chasing the same of your goods is inflation on the other hand if they actually did something and there's so much to do like you know desilting tanks like pruning kind of roadside stuff like supporting agricultural workers like you know there's so much that can be done that needs to be done then it becomes almost like the great works program of you know the 1940s after the war Eisenhower's administration's decided to build the interstate system not because they needed the roads but because they needed to provide employment and in the course of providing employment they built this fantastic road network that ended up transforming the economy for the next 20 or 30 years because it was just such a you know economic value add in terms of goods transportation people transportation cost reduction time reduction etc. is a huge productivity boost so there is a scheme which in implementation can go either way it can be a fantastically good scheme it can be a by design inflation of the scheme and not just that it love second order third order knock-on consequences if I go to a rural area and I start paying people to do nothing surely the wages for people who do something then climb dramatically then the cost of agricultural output increases so in this case is not just high technical or theoretical inflation is direct inflation in fundamental things like rice or you know vegetables which are produced from the rural areas where the Rural Employment Guarantee Scheme works then you look at schemes like in my opinion the cow and goat scheme now I'm a member of the Public Accounts Committee so I see of the assembly so I see the audit reports in my mind these cow and goat schemes are not workable but they are simply too complicated and require too many checks and balances to be practically executable they are nice to announce they're catchy you know what we say in thermal cover Chia but they are not practically implementable because there's so many ways it can fail and we see in the audit reports that it fails all the time right then you look at schemes in my opinion which are blatantly kind of you know for lack of a better word ill-conceived and and pointless and you know counterproductive schemes like the subsidy for two wheelers for power two wheelers now here you have a state that is running something like a 14 or 12 crore loss a day operating a public transportation system and not you know where there's demand there's not enough buses and where there's buses there's too much demand right like I mean what do you say non-productive routes the government is not supplying enough support and in you know City routes there is not enough buses right so you have a system that's failing in every way instead of encouraging the development of that system and fixing it and spending your money on that you start going ahead and doing things like providing free two wheelers how many how many people can you possibly impact it is bad in design it is bad in conception it is bad in implementation I'll tell you they say they're going to help them unlike people I mean we're a population of like 7 crore what are you going to do by helping 1 lakh people what will it do to the average productivity the subsidy is 25,000 rupees there is a lot of money the the the widow's subsidy the the you know disabled monthly pension is thousand or thousand five hundred bees you're giving two years’ worth in one check you think there's going to be corruption and malfeasance there or not of course it's going to happen in droves then what do you have you have another one like scooters and you know two wheelers on the road in a place where there's not enough kind of Road capacity for the traffic so you're increasing congestion now whatever benefit you're giving those won't like people the remaining ten lakh or twenty like people on the road are already going to pay the price by increased congestion and their productivity goes down the traffic congestion goes up then you have environmental pollution surely it's going to be better if they Road in 50 or 100 buses instead of one like two wheelers so it is a policy that is designed badly implemented badly conceived badly it is irredeemable in my opinion and yet we have that are also being done so now if you say I all schemes the same the answer is No separately I take it to a third level and say are these schemes the reason for the deficit of the state I actually have to think no if you actually look at the math the reason for the deficit of the state starts with number one revenue mismanagement you know if we had been managing revenues as the trend from 2003 when the Fri Act was passed till 2012 let's say it was the pattern today the state's revenue should be about twenty twenty-five thousand crores more so somewhere the system has failed in the last four five years is only after 2014 I can point to this day that at least what the paper says what the data says the day that general because hands miss Delta's hands came off the tiller the day she went to jail for the first time in Bangalore unexpectedly without having laid plans in place from that day the state's finances have deteriorated and gone through the floor and we can show that mathematically I have done it many times and we went till that day we had never had annual revenue deficit of greater than two or three thousand crores in fact the cumulative deficit of whatever eleven years from 2003 was only about thousand two thousand girls because the five-year DMK ranging from six to eleven at run at revenue surplus government over five years they have run a two thousand six hundred core revenue surplus level from 14 till now the annual revenue deficits have plummeted this year will end up something like sixteen or seventeen thousand crore revenue deficit and something like forty fifty thousand crore fiscal deficit and this is a recent phenomenon and this phenomenon has many components the freebies being the least of it it is bad revenue management it is bad expense management it is bad interest management it is you know excessive debt taking it is horrendous mismanagement of the finances in every way if this was a company by now the market would insisted that the entire board be fired right we should not have these people managing the economy

that brings me to two related questions and and let me first drain the fifteen Finance Commission here because that is of course one source of revenue for the state and I know that the DMK and particularly you have spoken quite aggressively about it to the Commission that came to Chennai for consultations and to the central government as well firstly like let's let's let me have you state the DMK case objections to the terms of reference one more time so that you know our listeners can get that clarified in there now subsequently walk into other words

 so I think broadly we had five objections the first objection was that the terms of reference gave the Commission two broader mandate and sweeping powers that were not justified in the context of previous Commission's or the laws and acts that already existed the second was that the the the requirement that the Commission should project forward for five years starting 2021 you know that they were expected to project forward expenses outcomes for 29 states and the center starting two years from now on ending 7 years from now and used that as the basis for decisions of allocations you know was just infeasible and kind of you know to naively idealistic in our perspective the and just to give one point I gave a reference I said under the FRA and the FRBM act in Delhi and the equivalence in all the states therefore is a Tamil Nadu Act we are required every budget to do a two-year forward projection just like we do a retrospective accounting final accounts of two years ago preliminary account of last year and then you know this year's budget and two years forward expected budget two years for if you look at the two year forward budget forget that even if you look at the one year forward budget compared to the budget that is actually presented one year later the forecasting ability of the state is close to zero there are gross variations in two years it's almost like random numbers right the numbers vary so much so my question to the Commission was when each state or the center is not able to project its own situation two years forward and we have a ten year track record that says that's true how do you expect to project for all 29 states plus the center five years forward you know and you just think about the rates of compounding right India is growing let's say between seven and nine percent and inflation is growing between I don't know six and eight or ten percent you know eight percent compounded ten years or five years is the completely different number than six percent compounded five years right so the odds that you can project forward five years in my opinion is very mere zero so why are you expected to make these kinds of projections and use that as the basis for decision making which means that you're starting in the wrong place before you decide anything and then the remaining three was they said that the principles were transparency equality or equity and efficiency and we said we agree about transparency no problem but when it comes to efficiency and equity we have some objections in efficiency we have good objections in badams that is positive or negative effect in part of that efficiency they were supposed to exclude what was supposed to be populist schemes we said how do you define what is a popular scheme yes I've just given you a lengthy explanation that not all freebies are the same so who is an unelected team of five members to decide whether a scheme framed by a government of elected representatives is populist or not so he said when you look at efficiency you don't get to make these kind of qualitative judgments of which should be included which should not be included in the reverse side if the goal of efficiency is allocate the money in such a way that you get the greatest you know net uplift of Indian society and citizens then the last six or eight election come in the finance Commissions have not done such a fantastic job because you've kept on skewing the allocation of resources away from develop stage to under develop States and you have kept on having the gap widened in most other societies and countries in China and America in Europe if federalism requires the transfer of funds from the better off to the less well-off you find that the gap closes you do that for a sustained period of time and you know any measure per capita income Human Development Index whatever make sure you take the gap closes that's what the transfers is supposed to do it makes it a more equitable Society but in India in fact it hasn't it has accessor baited it keeps on getting wider and wider so you are not achieving your goals of efficiency maybe you should be looking at different measures and different leading indicators because the final outcomes will take years to manifest so maybe you should be looking at things like you know extent of women's participation and education in the workforce in politics which are well established leading indicators of you know then declining birth rates and then increasing output and then increasing kind of societal you know development indicators and so forth and then finally when it comes to equity or equality or fairness if you will we said 100 percent of this talks about how to divide the pool vertical to horizontal you know meaning central government States collectively and then individually which state no where do you talk about input to output fairness right if you have not even mentioned where these funds come from by definition these funds are collected by the central government through taxes and cesses and surcharges from around the country they don't you know drop from heaven so surely there must be some consideration of where the money comes from relative to where it is given to you can't keep on taking from those who give it and then keep on you know not sending the money back so at the end of all of that I said combine the fact that you are not capable of projecting five years forward I say so I say that you cannot accurately project five years forward number one number two there must be some relationship between input and output fairness it requires it if you put these two together I say that what you should recommend for a change is an innovative way of allocation you might answer it one more thing the government central government randomly puts in cesses and surcharges whenever it wants and there's no constitutional bar to that and you know in recent years it has been collecting one and a half to two and a half lakh crores a year in cesses and surcharges now as you know the cess isn't surcharges don't go into the divisible pool they get hundred percent helped by the center supposedly to achieve specific targets like toilet building or you know Christian or whatever the names are what Santa Carmen has never been able to achieve those targets so they collect the money and neither can they execute because those targets cannot be achieved by central government prowess they are subjects of the state which means that you have to end up then splitting the money again to the states to do the work then why do you put it in a separate indivisible pool just to give yourself the flexibility to decide where you'll spend the money just think about it this way if the project can only be done by the state why do you collect it in a separate test you just throw it into the total revenue and let the states take the money and do it now you direct them within when you give the grant you say this grant is only for toilets this grant is only for you know clean housing whatever it is right sewage development sewage treatment del agua but instead of that you say that you're going to set it up in a separate pool and then you are not able to execute from that pool so there's these three issues so so in fact we didn't press it that much but the CPM mr. de Aranjuez in the Raja Sabha MP said we should abolish all cesses there should the central government should not have the right to do such as these ancestors they either take it as direct taxes or indirect taxes or stop you cannot exclude money from the pool whatever money must go into the pool and then we said on behalf of the DMK we said instead of having a fixed formula have a variable formula you just design the formula for as you say the allocation will be based on this multiplier times this performance indicator Plus this multiplied times this performance indicator whatever that is per capita GDP women's participation in education you know percentage of girls and rollin school whatever it is you pick those indicators and leave it as a floating formula and in that floating formula put up a floor and a cap a floor says that no state should get back less than X percent of the taxes it paid in that's fairness and a cap says no state should get more than X times the taxes it paid it again that's fairness now because of the way math works and because large numbers you know are significantly different kind of ratios than small numbers for example it is mathematically feasible that those cab and floor could be widely disparate that is to say you can say no state should get back less than 33% of the money had put in or forty percent of the money it put in and simultaneously say that no state should get back more than three times the money or four times the money it put in because the states that are poor are putting in so little that for X days is less than two-thirds what I am NOT getting back you and think so the math works actually in our favor so you could have equity and still laugh so I said if you have a floating formula with a floor and a cap taking into consideration input not just output then you have a much more fair and equitable distribution so one problem that I see is that there is a okay let me read one of the concerns that I have with you the solution that you have proposed while I completely agree that it will work mathematically I suspect the Finance Commission is unlikely to accept it simply because it doesn't suit the politics of North India and if we look at why it doesn't suit the politics of North India we can see from the birth rate data and from the fertility data and from their literacy rates of women from the ages 15 to 24 like women who are in the prime age of going to give birth like for instance they have dressed of much of Bihar Rajasthan Uttar Pradesh Madhya Pradesh Gujarat all these states have double-digit sort of female illiteracy amongst the girls who are in the ages of 15 to 24 and in states like up with the position Bihar they are like upwards of 30 percent and the ratio of that population which is under the age of 15 and these girls are again going to you know become mothers very soon is like upwards of 30 percent right whereas those numbers if you see four states like Kerala and Tamil Nadu the Kerala has 22 percent of its population under the age of 15 and it basically has almost no girl child who is illiterate in Tamil Nadu scales it is about 25 percent of the population is under 15 and like 1 percent of college girls in this age group are illiterate so the point I'm trying to make is these numbers are already cooked in we cannot change that for the next 30 to 50 years do you does that worry you like it does that worry you in terms of this divergence being while the demographic destiny is sort of cooked in we are arguing about the policy in terms of politics and I suspect your solution is not even going to get implemented so how do you see this no I mean of course it worries me tremendously but it should worry anybody who can do mathematics and project forward right and who has access to this data but actually your argument for why it is not politically palatable is the biggest motivation I would say why it has to be done in the sense that if you don't do it in fact the concluding line of my submission on behalf of the party was that unless you put in some kind of system like this you are going to reach a stage where the ratio of putting into getting out becomes some simply intolerable unpalatable right and at that point you're going to have serious questions like of the integrity of the country right at some point people are going to step back and say look what's in it for me I keep putting in 10 and getting back one at some point this is no longer palatable right and again I say it would be palatable if putting in 10 and getting back one was a temporary solution that led to the other people coming up so that eventually the trend was going backwards that I put in 10 and get back now 5 because everybody's uplift brings us back but given the data we have today the spread is going only one direction not only is it going one direction it's accelerating in one direction so if you look at Tamil Nadu for example in the 10th Finance Commission in to 1994 our allocation was six point seven or six point eight percent then we kept dropping dropping dropping and now we are at four point zero three or something like that right if that trend continues this year this Finance Commission is likely to recommend something with a three handle not even a four handle whereas our contribution to taxes is depending on you know and the government purposely doesn't publish this data with great clarity but depending on which estimate you take or even using percentage of the country's GDP which is Tamilnadu GSDP as a rough approximation is somewhere north of eighty eight and half a cent so at some point I say listen am i keeping on paying in eight ten percent of the total and getting back from six to four - three - two - you know at some point it becomes unpalatable so all I said was that unless you do something like this where you start giving weight age to the input and you start having some floor and cap limitations you will not be in kind of you will not be helping the cause of integration of the country you will be helping the cause of you know this various tendencies let's say listen you know at some level this is just loot you know you keep on taking my money I get nothing for it and you are not able to make any part of the country better it's one thing if you took the money and you actually achieved the outcome you know I again I gave the speech somewhere else at the endowment lecture and I said we are second to none as citizens of India in Tamil Nadu in wanting our fellow citizens to progress and develop and be healthy and happy and productive no problem but if we keep sending money and getting less and less back and that gap is not showing any results but you know when in the European Union you took money from the Germany's Frances of the world and gave it to the Spain's kind of Portugal's of the world they converged right in the US you take money from the California's new yorks of the world and you give it to the north dakota's montana's of the world the standard of living the quality of development converges in China the coastal provinces are net contributors and the hinterland is net receivers the quality of life I mean it's not it's not equal but it converges in India it keeps on diverging and if it keeps diverging that's at what point do we consider that this is not a you know a working solution right so either you produce results or you stop wasting the money and it's not as if we are like so great it's not like we're living at forty thousand dollars per capita that we are so well-off that we can afford to keep giving up revenue for low returns right so this is a question that I have been asked quite often and and therefore I looked into all these societies that you mentioned let's take the US where you know states like Alabama or states in the Appalachian South or in the Mountain West these were generally poor but the difference is people from those states go into New York and California and if you see the population of these states it is the well-performing states whose population is increasing same with Europe like Spain's fertility rate is 1.3 like it's everywhere as the population of Germany and Britain and even to a lesser extent fans is like slightly slightly higher on a higher trajectory and India is probably the only Society in such a structure where the poorer regions which are receiving assistance are actually creating population growth by what you great a fertility rate as opposed to migration being a course of oh no no that's that's actually yeah I'm not 100% sure how much of it I can separate as fertility or migration in other parts of the world but I completely take your point lets you forget the Delta perspective let's take the static perspective in China the coastal provinces that other greatest economic producers are also the most populous because people are migrated there in America California New York are not just the greatest GDP stage they're also the highest population states so you're right in that sense India is a very unique situation because the highest population states are the poorest states in most societies the concept of a federal society is that there is unrestricted movement of goods labor manpower capital etc which means that if there is a dichotomy where you know there's some places where there is opportunity and quality of life and some places where there's not people will tend to migrate in fact within Tamilnadu we can see that there's a huge disparity in tamilnadu relative to Tamilnadu standards not to India standards between urban and rural GDP or quality of life not so in health and education thankfully but in some other ways like you know infrastructure in terms of plumbing sewage etc or you know per capita GDP or availability of industrial jobs or white-collar jobs things like that so in a totally fungible space which our country is supposed to be a country under one Constitution is supposed to be completely fungible that anybody can go anywhere then the system would have kind of brought itself into equilibrium there would have been net migration to those places where opportunity occurred or grew or existed and not so India is very unique because we have this really exceptional situation as you say where the highest population static plus dynamically highest growing populations are in the poorest states because of we have not yet crossed that point where birth rates you know in the history of the world birth rates moderate after economic development and you know the greater the economic development the lower the birth rates that's you know well known demographic pattern all over the world so we will not cross that my question is how do we get over there now part of that is for example I just come back from a seminar in in Delhi on job creation in India that was what was title and speaker after speaker told us that the country is so diverse and so vast that there are no nationwide problems and there are no nationwide solutions in fact they may not even be statewide problems and statewide solutions if they would have to be regional problems with regional solutions because we are not you know as the economists once put it we are a continent masquerading as a country either by scale of people or by landmass or the variability in its you know deep and long history and culture we are a country on paper in practical terms we are quite disparate in every measure from you know historical differences to language differences to developmental differences to education level differences to human development it makes differences to per capita differences so a lot of these solutions need to be local right now again incidentally this was one of the great principles of the Justice Party going back 100 years was local self-governance the amount of power that the madras presidency government delegated to the district boards and the district chairman was phenomenal and it was done in their time they pushed as much power down as possible so the future of a country of our size has to be greater and greater federalism we need to start pushing from taxation to spending to policy decisions closer and closer to the people you cannot sit in Delhi and administer 1.3 million people I have just been saying that in a slightly different way in politics I said in my mind there is no truly National Party in India left today even the BJP for all its money for all its infrastructure for all its support from the RSS is barely in 18 or 17 states now you can buy positions you know on the run while you are in power and when the money's flowing but you know realistically they have infrastructure in 7090 States not 29 by any by any stretch of the imagination right there for example in Tamil Nadu they have been irrelevant and they are in irrelevant today you would have thought that if it was doable in four years they could have built an infrastructure with a you know fantastic inside and everything the Congress is even worse off because the Congress is infrastructure and governments and organizational talent is less than the BJP so they are probably in 10 to 14 States people like us struggle in one or two states right because we have not paid enough attention to organizational infrastructure and design and work ethic and things like that so India has now reached a scale or I think scientists would agree politicians have to face the reality and the problems have reached the complexity where there cannot be easy national one-size-fits-all solutions the answer must be in greater and greater devolution of powers including taxation raishin and spending further and further down the spectrum all the way down to the local bodies I mean the corporations and the village projects that that brings me to the until until miss channel that was around at least the ADM k used to oppose the centralization of let's say the National Food Security Act the Ruth a scheme the GST even you know mama all these were looked at as assault on the federal structure right now the ADM k government has signed on to everything that you know she had opposed the diem case position on GST was always it was always in favor of it but for a uniform rate I suppose so given that there is you you've laid out the problem in terms of how there cannot be one size fits all however the politics and the policy of the country is going towards over centralization and and this is the point where one is forced to ask do you already see the fizzy barest tendencies creeping up or is it the role of the politician to basically say you know what the way in which we will solve these problems is through these long term policy propositions or propositions like you have just laid out and my follow-up question to that is is that the reason why there are a whole lot of Tamil nationalist parties out there which are gaining traction the DMK for instance in my own workplace is the the young people who are in the 20s are gravitating towards people who are more militant so to speak do you see that as a problem for your own politics and do you see that as a problem for the country as a whole well you know being an active politician and sitting in opposition I don't want to you know kind of debased this discussion by by going on a political slant but I'll say a few things I will say and I've said this publicly on TV we may have had many political differences with Miss Jane Delta even with Mr. Muir and I say we though I'm only new in politics because of my legacy you know I'm a long generation I'm a multi generation long term kind of DMK guy in my existence but I think it's fair to say that we never expected how bad things would get in her absence right whatever the difference is nobody could argue she was a talented woman she was a capable woman she was you know the match of anybody in any field and in many ways I would argue that the data suggests she was not nearly as good an administrator as tell her coming here but then I would also have to probably concede that she was a better authoritarian disciplinarian party leader and managed you know a ragtag bunch more effectively than than anybody else in in recent politics but in her void the the real tragedy and it's it's beyond politics the tragedy is that we don't see any voices that have any fundamental views from a policy or principled perspective I mean the world the wheels keep moving the direction is sometimes coming from Delhi sometimes by random sometimes it's a stone and tear takes a turn you know I have sat in the assembly for 2-3 years now and ever since the absence of magenta I have not found a cohesive vision for what this gamma stands for what are they for what are they against why do they do what they do you know I had an unexpected chance to speak on the governor's address debate earlier this year and I said this is a farce I pick up this book and it has schemes listed for two crores five crows ten crows I did this I'm going to do that the budget of the state is to like 30,000 crores surely in a policy address at the beginning of the year surely you should be talking about fundamental things what am I going to do about groundwater management what am I going to do about job creation what am I going to do about fixing the educational system which on the one hand is throwing out all these under-qualified graduates on the other hand tamilnadu accounts for 40% of all student loan growth in India surely many of them are going to turn bad right you have not talked about what you say in your own policy statement somewhere else that the state is 48 percent urbanized and is going on track to 75 percent in 2026 okay we are less than replacement rate Society that means if the net population is not increasing that much you are saying wherever there are two people now in the cities and two people in the villages there's going to be three people in the cities and one person in the village what are the implications of that for village life what are the implications of the city lever I represent 100 percent my urban constituency we are not able to get water intake sewage out get food and supplies in gets garbage out or provide safe traffic and you know infrastructure for the existing - residents how are we going to do this for three before we can build infrastructure the demand goes up but before the sewer lines are opened they're clogged you know the volume is going to clog them so what is what is your policy on all these you know and every year you neglect this you just success a bit the problem when you finally deal with it so I would say you know that the depressing thing about this this last couple years since the passing of magenta is you know whatever how the limitation she understood enough to know what were the issues and how to deal with it and I am sad to say politics apart I have not yet seen any sign in this government not from the bureaucrats not from the ministers not from you know any kind of document layer on the house that they have a vision for how to address these fundamental problems and how we're going to deal with this now going the other way surely you know the level of frustration of people goes up when they don't see light at the end of I mean you look at what happened in Sri Lanka I was there the year before the trouble started and it was already on the kind of boiling point this was probably nineteen eighty eighty one and then you know you just saw what happened and that was like after ten or fifteen years of bad government policy excluding Tamils from jobs limiting their educational opportunities forcing you know vernacular education so that people couldn't get English education and couldn't be qualified to do work so you know ten or fifteen years of lousy government discriminatory policies then blew up and then it took whatever twenty thirty years not that it's 100% resolved now but it became an hour-long problem so history teaches us that either you deal with these problems when you have a chance or they will become problems that manifest themselves on you in ways that you cannot control or manage right it's it's human nature now I don't want to be alarmist it's not like there's going to be blood on the streets revolution you know next year or five years from now but I have been to many parts of the world you know I'll give a very clear example of Venezuela and I'm talking Venezuela 15 20 years ago before it got as bad as it is now even 15 years ago in Venezuela you probably were better off with somebody actually riding shotgun with a shotgun sitting in the front seat next to your driver if you were going out you know after duck right now in my opinion the longer we allow both societal and economic kind of disparity or unfairness or perceptions of you know no hope no voice no input to permeate the youth the greater the problem again history teaches us that the one critical kind of catalyst for evolution is a large number of educated unemployed youth every single revolution in the history of the world has had that as the you know key ingredient and we are churning out so-called educated people and a much like exponentially higher rate now than we were 20 or 30 years ago not only has the population increased the number of educational institutions is increased and the accessibility has become universal so I mean in Tamil Nadu today I think if you wanted to go to college and you are not that particular about the quality of the college I don't think there's anybody who wants to go to college you will not get admission in some college right and this is exactly the opposite of what it was thirty years ago when I went to college so I think we are creating the conditions that will either be really helpful to us if we have good policy or the conditions that are going to be really dangerous for us if we look at history and we have people who are educated without hope without work without a voice and with no kind of you know perspective that says that there is some you know future that is going to be better than today what do we do when what we have now is essentially elected dictatorship right like the structure of our governance is such that like the DMK now has 89 MLA's but if like at best what the records in assembly is that you can stand up and basically point to the government how absurd it is but the government doesn't do anything and this isn't restricted to the DMK I'm sure like even if the true you know the shoe was on the other foot and the DMK were bad like similar things could happen but the point I'm trying to ask you is shouldn't we therefore have legislative reform of some sort where in these kinds of if the government is as populous as you and I agree it is right now shouldn't there be a recourse of some sort and and do you have any specific proposition for that yeah listen again I'd separate the two I'd say it's rare in the history of Tamil Nadu that we have had such an inept and incompetent in my in government but is also a rare kind of occurrence we're sitting Chief Minister dies you know within six months of election and so forth so of course it's an extreme situation now I'm not sure that I would extrapolate the policy means of the country from an extreme situation sooner or later this too shall pass and we just have to be patient you know I'm reminded that I'm not an investment banking anymore problems don't get fixed you know because they get recognized but you ask a more fundamental question which is a deeply troubling question and as I say again I've just come back from this legislative seminar which had 30 odd legislators who from 13 or 14 states and almost all of them had the view that the functioning of the Assembly has become kind of on like automaton mode right you know know like again I'll give you an example in the normal governor's address so let us take the Queen's address in the UK equal number of ruling party mmmm peas will get up and have a view on the Queen's address because the Queen's address represents the elected cabinet's agenda for the year they may say they want to focus on agriculture I may come from urban costumes see and say no you shouldn't only focus on agriculture you should also focus on you know greenhouse farming in cities and that is perfectly okay because I'm here to talk mostly for my constituents only secondarily for my party it's okay for me to have a different agenda than the cabinet of my party in India that kind of dissent basically doesn't exist right and mainly in India is very rare to find people who encourage that you know several levels of leadership right and again whatever ms gel has positives and there were many one of her faults was that she would not Brook any kind of you individuality or raising your head or turning to the side or doing I mean you know the images of the genuflecting have a vivid in our memory so to that extent you know in my understanding the level was spectacularly kind of broad-minded in the sense that he would take input from anybody and everybody and as smart as he was it would call 10 or 20 additional people and take input you know and the big difference between Tolliver and Mozilla there was that Majella the formulated policy on our own over three or four civil servants or whatever her private advice as well nobody knew and all the rest of them you know nodded their head like sheep the level actually take you know conscious input from tens of people would listen then he had a fantastic talent which you know I don't have certainly if he asked for views he would never betray whether he liked or disliked what you were saying or aggrieved or disagreed with what you were saying so he got full clear input and he never said that that doesn't make any sense to me what are you talking about it's nonsense and then he would formulate policy then he would check it with two three people known or not that is a substitute for the fact that this debate really ought to happen in the assembly you ought to stand up and do this debate but even there I will give an example in the 96 to 2001 bmk government when my father was Speaker of the assembly a diem cared for MLS Congress had 40 50 and you know the DMK had many and but because of the way the coalition worked there was virtually no opposition and Tolliver ensure that they assembly met 52 days a year I mean you why you are you are overwhelming majority the opposition is four out of 243 mr. Elton did not win our own seat right and yet they assembly met 52 days a year I'm not saying spectacular but compare that 52 days a year to here we have the highest ever opposition members in the assembly 89 hours plus our coalition partners night now if you take out the disqualified members we are close to 48 49 percent of the assembly and the assembly barely has met for 30 or 32 days a year for the last two years there has not been a single date has met if it was not for the governor's address the budget the demand for grants or the confidence portion it has not even met one day just for the sake of discussing bills or you know debating a law proposal or anything so democracy in that sense the legislative system is effectively dead you're right once you form a kind of ruling party and this is not unique to terminal I'm saying Tamil Nadu is a more progressive state if that is a kid in terminal you can imagine what it is in utter Pradesh or you know Bihar or someplace like that so all these ml is actually the 32 33 ml is across party lines across all states the more the fact that legislative kind of democracy is in sore need of fundamental kind of rejuvenation right that that it practically doesn't exist that there is no real debate that there is no real kind of you know policy setting that most legislators are reduced to rubber stamps and you know that as I remember the comment one of them may be said the anti-defection bill is the bane of democracy right is that you have now been reduced to the law says that you cannot go against your party and you just have this nod your head when they say yes right if you don't like it they show up you still have to say yes right so I think I hope that over time there will be you know structural reform would be consider some form of directive because we don't have referendums in this country would would that act as a counterweight would it has its own set of problems but do you consider that as a counterweight or do you consider sort of secret ballot within the assembly as a counterweight do would you consider these options or would you just say that you know doing away with the anti-defection law and allowing for legislatures to just stand up and risk because III assume the the even if you take out the anti-defection law if somebody wants a ministerial position within their party they are probably not going to offend their party leadership so there is that inbuilt problem right like so which one would you prefer yeah I'm sorry you know I'm so new to the system I can I can identify and when I hear it from others I it resonates with me that this is a countrywide problem and this is true of all legislators I think it is less so in the Parliament to some extent partly because I think with the exception of this Lok Sabha which is simple majority for the last 20 25 years we have had kind of coalition government with many parties in the rollin many parties in the majority and therefore enabling at least a party to party difference within the ruling coalition I am very clear that it needs structural reform I'm also pretty clear at the risk of offending you know others that many mla's today are not capable of operating in an ideal system in fact I made the observation to a friend of mine that the attributes and assets required to get elected as an MLA in today's political you know environment have very little overlap with the attributes and assets that are required of a good legislative understanding of policy ability to debate ability to absorb and process information you know the amount of information the government supplies you is tremendous most people don't even pick up that information take it home and forget read it you know the government does its own bad work sometimes it produces the bill there's a rule in most assemblies in the Parliament that you cannot ward on a bill the same day it is introduced but if you look at the Tamilnadu Assembly many many many times I would say 75% of the bills that have been passed since I have been an MLA are only dropped on the desk this morning or sent to our house last night then they pass a motion because of the majority waiving the normal rules that you can't introduce and pass on the same day and then they pass the bill so if I if I had to take a bet as an ex trader I would say less than 25% of the amylase have actually read the bill that is passed whatever the bill is when the speaker says because the allman is introduce the bill you know in my to an obvious there's never been a private member bill so of the government bills that have come once the speaker says who votes for it obviously every ruling party guy says yes right so and then it doesn't matter what we say you know it's it's a majority vote it doesn't matter whether it passes as you know 120 to 5 120 215 it still passes so most people in my understanding don't actually read the bill before they pass it now is that a fault of the system is that a fault of the process that brings these people to the system is that a fault of you know the evolution of politics over the last 20 years I it's hard for me to say but the system is broken isn't this where a lot of people would place criticism on the political parties themselves be the ADM K or the T and K the way in which the threshold for entry into politics has been raised to such a level that there are only very few people who can afford to get in either with money or powers otherwise and that big hand you had a you know a primary system or things of that nature elsewhere like regular people who will do these things would probably have come into the system it has politics evolved to such a way that the restrict people who would you know have read and been good legislatures and is this a chicken-and-egg problem is what I'm trying to ask you this is I don't want to end on a pessimistic note so I'll tell you what it but yesterday by consonance I was at the Bloomberg acj financial journalists program had the asian college of journalism and somebody asked me says i said i want to enter politics but it's very hard what do you think and I said actually the primary reason I'm in politics going back to your first question yes of course I have my legacy yes I water continue I owe it to my forefathers I owe it to the system I owe it to the movement I owe it to the future generations but at the end of the day by God's grace my life was very well organized forget academics I was a senior managing director and a large global bank I was you know certainly in the top whatever point something percent of earners and quality of life guys and the final decider that I had to come to politics was that I had a ramp already built and the odds of another guy like me having an entry ramp or close to zero so I start with the fact that you said which is that the barriers to entry are high almost infinitely high and unsurmountable and then there was a guy like me who despite being away for 30 years in many countries doing different things doing you know studying different things I had this ramp and so in the final analysis I couldn't kind of my conscience wouldn't let me sleep at night if I didn't take that ramp precisely because there are many people who are as driven or more driven than me and as talented or more then we would like to contribute to the country through this Avenue you can contribute in many ways but through the avenue of public service and politics and elections who simply don't get the chance and so though it was a you know a relatively small opportunity cost for me a quiet and comfortable and luxurious you know life away from the spotlight and and people underestimate the the price of the spotlight right so you know though I sacrifice those things which in the scheme of life both I was blessed to have and they were - sacrifices I simply couldn't afford to not do it because the barriers are so high because if I didn't do it I wasn't sure when the next guy like me would have a chance right so both ways meaning hey I had to do it otherwise it was a wasted opportunity to make an impact be if not me it was not clear when the next guy like me would have had this opportunity but in the same speech I said but that is changing dramatically I said that you know and the change is coming more and tamilnadu than anywhere else I said as little as 10 years from now I think we're going to be in a different scenario we're clearly at the end of one ERA you know anybody who has observed politics for any length of time will say that the passing of the lever and magenta certainly marks the end of an era right there kind of straddle the political scene for at least the day since the death of mr. Angier which was then 80 something right 87 idea so if you add that to the three or four other variables I'm going to tell you which is that the percentage of you know college-educated youth is exploded the percentage of youth as a percentage of the percentage of as a function of total voting population has exploded because the belly of the high-growth years high birth years have now come to voting age and the connectivity has exploded I was toggled to a vendor from one of the big kind of Internet companies and they were telling me that something like three and a half crore distinct individuals in Tamilnadu are accessing the net yeah and that's like more than half the water population right and that is phenomenal and of course recent events meaning in the last two three years the Geo's the competition introduced by the geo has changed the world dramatically so I think you know change is happening much more rapidly than most people realize which is always the case right when you're in the midst of something you can't understand it I was giving this example that I was in the North Tower when the 9/11 accidents in 9/11 terrorist incident happened and I had come out of the basement about three minutes after the first plane hit I knew there was something wrong but I had no idea what it was I mean you know I yeah I'd go this way I go that way it's a different long story but literally it took me about 20 minutes after the second plane hit which I didn't see because I was inside the building I could just see the smoke and the life to realize they were commercial planes and not a lot you know small Cessnas and that it was a coordinated because till the second plane it you even the guy was standing next to me other Lehman employee said he thought the first one was an accident see how the brain works right he sees the second one coming in and he says man that planes coming really close considering we already had one accident we never occurred to him that the first plane was a conscious attack right so when you are in your environment you can't see change happening all around you because your your field of vision is not both you know from granular to 30000 and you know infinite white perspective but you know people like me who are relatively new to the system whose job because I have the IT wing for the DMK is to look at data and build infrastructure and start talking to vendors and look for communication channels and stuff like that if I put all of this together I would say that we are in a you know transformative phase it's always the case in a technology business you know the classic s-curve theory of you know technology slowly evolves it accelerates it matures and as it dies the next one comes and the end of one s-curve when the beginning of the other s-curve is always a highly volatile error we don't know which new technology we don't know which new direction we know change is upon us what we don't know how fast and we don't know which direction that change is going to take us so we are at that level of you know the evolution it is clearly the end of an era it is clearly the beginning of a new era precisely what direction that error will take and you know what that means I don't know but I know generally it must lead to a fundamental transformation in the nature of politics because we have everything changing at the same time it's not the same leadership it's not the same water it's not the same communication channel and it's not the same issues so when you have that much flux in the system you know it's it's an indicator of change so I I told the young man I said you know maybe in 10 years it'll be different maybe in 10 years you can enter politics you know in without having kind of an on-ramp like I did where the leader you know was gracious enough to give me an opportunity based on my legacy and so forth and I think of the Lord of change that I said communication is going to be the biggest change because what you don't think about is how what does a party really do for you a party gives you infrastructure gives you a platform gives you a built-in kind of war share gives you a built-in distribution mechanism right that's needed when you have to do it a human way if if I'm in America and I can reach with technology anybody I want and targeted sometimes using kind of known methods sometimes unknown methods then you know you can have a Donald Trump come out of nowhere never you never even been like you know counselor in New York to president one day you can have look at all the upsets that are happening in the primaries in the u.s. now at completely new faces just shaking up the system well so the party infrastructure gets less and less valuable the party's platform gets less and less valuable as technology penetrates and I think we're in that transition now that has been a conversation that I both enjoyed and gave me a lot of reasons to worry

Thank you so much for such a thoughtful and patient conversation. We also wish you the very best. We hope to see you in a ministerial position very soon sir.


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