Jayalalithaa's eminently sensible act

There is a persistent feeling that the quiescent South is marginal to and excluded from national affairs. But the technology boom clearly kicked off an economic revival at least in Bangalore, Chennai and Hyderabad. Now it appears as though there are welcome stirrings on the political front as well, across the South. Chandrababu Naidu has championed good governance, but now Jayalalithaa and A K Antony seem to be doing some plain-speaking and 'tough love' of their own.

The redoubtable Jayalalithaa did something startling in Chennai: in one fell swoop, she broke the back of militant Marxist trade unions. The lady is known for her single-mindedness and her iron will, but she frittered away the goodwill in her first term with Marie-Antoinette-style high-handedness.

Jayalalithaa II is a different person altogether. After the tactical blunder of the arrest of arch-rival M Karunanidhi in full view of television lights, the chief minister of Tamil Nadu seems to have bested her rivals in strategic power plays. She gave them rope, without herself taking any initiatives, and they have hanged themselves through infighting and confusion. In particular, Karunanidhi's DMK looks like a bloodied and punch-drunk boxer who took one too many hit to the head.

Tamil Nadu, like all other states in the Indian Union, is facing a financial crisis on account of stagnant revenues and spiraling costs. The most obvious reason is severe over-staffing, with the result that a large fraction of the budget goes towards paying salaries and other benefits to government employees.

A study of the Kerala government's accounts a couple of years ago by a retired IIM Bangalore professor revealed, not surprisingly, that some 70% of the budget went towards purely unproductive expenses: salaries, pensions and other personnel obligations. There was, in effect, no money to run any projects, even if, by some miracle, government employees were inclined to actually work on said projects.

Under these circumstances, the Tamil Nadu government decided to tighten the belt by reducing some of the entitlements of government employees, and this is not unreasonable. However, recalcitrant leftist unions of teachers and bureaucrats decided to strike work.

They were in for a rude surprise: under the Essential Services Maintenance Act, and armed with a court order, Jayalalithaa summarily dismissed the striking workers and started recruiting replacement workers. Given massive unemployment among youngsters, it was not difficult to find eager new employees willing to work at much lower wages. I am strongly reminded of how Ronald Reagan broke the Air Traffic Controllers strike some years ago.

The man in the street in Tamil Nadu applauded this act, for the general public is fed up with overbearing, bribe-seeking, rude and uncooperative bureaucrats; and offices are so overstaffed that even if 200,000 positions were eliminated, things would work just as well or as badly as they always have.

The trade unions lost it in the very first couple of days of the strike, as the government was ready and waiting for them with contingency plans. Realizing that they would lose their jobs, panicked strikers fell over themselves in their eagerness to apologize, return to work, and throw themselves on the tender mercies of Madame Jayalalithaa.

This is a salutary experience for leftist trade unions. The days when they could hold the country to ransom are beginning to be just a memory.

It is a fair bet that Jayalalithaa was emboldened by A K Antony's success last year against striking government employees in Kerala last year. Given the more violent and entrenched nature of Marxists there, Antony was a little more diplomatic; but in the end, there too the unions lost, and the strikers returned, tails between their legs, as it were.

This singular act on the part of Tamil Nadu has, I hope, set the stage for other state governments to react swiftly and decisively against would-be strikers. The prospect of losing a cushy job (with opportunities for rent-seeking) appears to concentrate the mind wonderfully. For those Marxists who love to point out how things are so much in better in their workers'-paradise homeland, I offer an article, 'Getting Paid in China: A Matter of Life and Death' (The Washington Post, February 13, 2003). Many Chinese are finding that they have to threaten suicide to get the wages they are owed. Sometimes this works, sometimes it doesn't.

The government is often chided by experts for not putting in place the unpopular economic reforms needed to get things moving: such as divestment of public sector units, improved easy of entry and exit for industrialists, reduction of subsidies, reduction of government deficits, and so forth. One of the least painless (for all but the babus) is the implementation of the Fifth Pay Commission's recommendations on reduction of surplus staff, and indeed entire departments.

Of course, bureaucrats have been fighting tooth and nail against this, and subverting all well-intentioned moves in this direction, in sabotage reminiscent of Yes, Minister. But the common Indian on the street supports the government when it stands up to these officious paper-pushers who are mostly adept at pretending to work. And their trade unions are most adept at turning away all possible investment, as they have successfully demonstrated in Kerala and West Bengal.

Tamil Nadu has a tradition of sensible governance, and its top bureaucrats and politicians have managed to attract much investment: for instance, automobile majors such as Hyundai and Ford and a whole slew of attendant component manufacturers have turned Chennai into India's motor city. I hope that Jayalalithaa's eminently sensible act in breaking this unreasonable strike is a sign of visionary, far-sighted governance.