How did political corruption begin in Tamil Nadu? N Ram has some answers

An interesting question is how such a system of political corruption came into being in the first place. Corruption raised its head in Tamil Nadu under Congress auspices in the second half of the 1960s, but it remained sporadic and low key.

When the DMK came to power in 1967 – a watershed moment in the political history of the state – the reputation of its helmsman, Chief Minister CN Annadurai, for personal financial integrity was unimpeachable. For the two years he was in office before his untimely death, he did his best to run a clean government. The situation changed in the post-Annadurai era when allegations of corruption and a lack of transparency figured prominently in sharpening tensions within the ruling party.

In November 1972, following the split in the DMK, MG Ramachandran (MGR), leader of the breakaway Anna Dravida Munnetra Kazhagam (ADMK), submitted a memorandum to the President asking for the appointment of a commission of enquiry to look into his allegations of corruption against Chief Minister M Karunanidhi, several of his cabinet colleagues, and DMK district functionaries and officials who were named for “abetting the crime of corruption by Ministers”.

Soon after this, MGR’s ally, M Kalyanasundaram, a Communist Party of India veteran, submitted two more memoranda carrying corruption charges. Nothing much happened by way of follow-up until the promulgation of the Emergency and the dismissal of the DMK government on 31 January 1976, ostensibly on the issue of corruption. Barely two months before the dismissal, a fourth memorandum had been submitted by two former DMK leaders who had joined MGR’s camp. Within days of the undemocratic dismissal, a Supreme Court judge, Ranjit Singh Sarkaria, was appointed to function as a one-man commission to enquire into the twenty-eight allegations of corruption and misuse of power; most of these charges had been gathering dust for more than three years.

The whole exercise, carried out under the authoritarian Emergency regime and featuring selective leaks spiced up by official propaganda, turned out in the end to be a futile affair.

In its First Report, submitted on the eve of the March 1977 Lok Sabha election, the Sarkaria Commission of Inquiry held that six of the seven allegations it had looked into had been proved, wholly or in part; and the Indira Gandhi government, which was facing an electoral debacle, let it be known that it would institute legal proceedings against Karunanidhi and his colleagues. Sarkaria had reportedly labelled the dismissed chief minister and his close associates masters of “scientific corruption”a theme and a phrase Jayalalithaa was to pick up during her successful campaign for the 2011 Tamil Nadu Assembly elections.

When the four volumes of the Final Reports of the Commission were eventually published, they turned out to be a damp squib: now most of the twenty-one remaining allegations were held to be groundless or unsubstantiated.The prejudicial political circumstances, the haste with which the 1976 exercise had been conducted, the inconclusive and laboured nature of the evidence turned up, the public perception that all this was a political vendetta enacted through a command quasi-judicial performance, and, above all, the electoral rout of the Emergency regime ensured that the corruption charges against the DMK and its top leader were buried.

The Sarkaria Commission’s labours, far from helping to unearth and combat political corruption, served only to undermine the credibility of formal anti-corruption mechanisms, in particular, commissions of enquiry, making them seem like instruments of political vendetta. This paralleled the way forced sterilisation during the Emergency set back the family planning programme by at least a decade.

Ironically, the foundations for Tamil Nadu’s distinctive corruption system were laid during MGR’s second term as chief minister (June 1980-December 1984).

The anti-corruption warrior had run a reputedly clean government in his first term (June 1977-February 1980) but it proved too good to last. The day on which TASMAC was incorporated as a company, 23 May 1983, can be regarded as the founding date of Tamil Nadu’s scientific system of political corruption. Vesting TASMAC with “the exclusive privilege of wholesale supply of IMFL for the whole state of Tamil Nadu as per Section 17(C)(1-A)(a) of the Tamilnadu Prohibition Act 1937” proved to be an ingenious idea.

In The Image Trap, a study of what made MGR immensely popular among “the subaltern classes”, MSS Pandian argues that, contrary to the image of the charismatic actor-and-politician being openhanded to a fault, the AIADMK government under him regularly “taxed the poor (and the middle classes) to profit the rich”. Noting that the poor contributed quite heavily to excise revenue, he points out that largely as a consequence of the MGR government relaxing the prohibition on liquor consumption, the share of excise in the total revenue of the state rose sharply, from 1 per cent during 1975-1980 to nearly 14 per cent during 1980-1985. And 80 per cent of this excise revenue came from country liquor, which was mostly consumed by the urban and rural poor. Pandian’s comment is telling:

“The manner in which the AIADMK government implemented a perversely unique liquor policy, which profited the liquor manufacturers enormously, is now well-known. It allowed the liquor manufacturers to decide the price at which they would supply Indian Made Foreign Liquor...to...TASMAC...Unlike anywhere else in India, it was not the manufacturers who paid the excise duty on IMFL in Tamil Nadu but the state government, via...TASMAC. Again, the AIADMK government exempted the liquor manufacturers from paying any excise duty on rectified spirit.”

The creation of TASMAC and vesting it with a monopoly of wholesale supply of Indian Made Foreign Liquor (IMFL) was widely perceived to be an innovative way of financing the state’s welfare schemes, especially MGR’s ambitious nutritious midday meal programme of July 1982, which quickly expanded to become India’s largest in terms of beneficiaries and a model for other states. Less known at the time was the stream of illicit revenues that began to flow from the favoured owners of distilleries and breweries manufacturing the liquor into a political fund that was now at the disposal of the chief minister.

It was the inauguration of grand corruption in Tamil Nadu – a corrupt set of acts committed at the top level of government that manipulated and distorted policies (prohibition and its relaxation), institutions (TASMAC as the sole wholesale supplier of IMFL), and processes (price-rigging, sweetheart deals, nepotism) to enable leaders to benefit at the expense of the public good.

Excerpted with permission from Why Scams Are Here To Stay: Understanding Political Corruption In India, N Ram, Aleph Book Company.