Is Tamil Nadu really richer than Bihar?| Business News

But none of this seems to matter as far as the confluence of economics and politics is concerned.

On Friday morning, Tamil Nadu Chief Minister Stalin announced that his government was transferring ₹5000 in cash to 13.1 million women beneficiaries of the state’s ₹1,000 cash transfer scheme in advance for the months of February, March and April along with a “special” amount of ₹2000. The advance has been done to preempt any restrictions on transferring the money closer to elections, and the special provision is, well, just elections. In Bihar the incumbent government transferred ₹10000 to about 15 million women ahead of the 2025 polls. Most observers agree that the cash transfer played a big role in the National Democratic Alliance’s (NDA) landslide victory in Bihar. It might as well help the Dravida Munnetra Kazhagam (DMK) led alliance retain power in the Tamil Nadu.

The question to ask however, is: What use is Tamil Nadu’s economic prowess if it has to resort to the same small-ticket populism to win a democratic mandate as Bihar, a state much poorer and backward on every possible front. Tamil Nadu and Bihar are on extreme ends of the spectrum, but the syndrome can be found in every Indian state today. Every official policy document and markets which track fiscal health are perturbed about this tendency. It is adding to debt, eating into money which could have gone into helping future growth and, last but not the least, creating what can be – at the risk of being pejorative – termed as institutionalized bribery to voters ahead of elections with a clear advantage to the incumbent.

Successful politicians can be a lot of things — but they are not dumb. They roll out such schemes because they know that the money being offered can really make a difference to millions of voters who have been baptized as non-poor in the church of official statistics. They also know that a lot of their policy success in things such as getting a new iPhone factory to a new airport in what used to be the back of the beyond until recently means nothing as far as daily struggles of this large economically precarious mass is concerned. They are only doing what they do best. Chase both of these things simultaneously. Investment conferences between elections and cash transfers on the eve of elections.

To be sure, India is not the only one fighting this dilemma. As capitalism gets more and more capital intensive, its rewards get more and more skewed, and the skill-based staircase to upward mobility gets narrower and treacherous by the day, more and more countries are waking up to this reality. If graduate degrees from the best universities in London and the US cannot get you a decent job – the western pink papers are full of such accounts – then its unfair to blame Tamil Nadu, let alone Bihar for failing to pull off equality and growth together.

Capitalism was not meant to have a peaceful marriage with democracy. It was a marriage forced by historical factors, most importantly and ironically, the rise of communism, which necessitated offering an olive branch to the working class and the peasantry. The marriage has been far from harmonious but it would be equally unfair to say that it’s been completely one sided. For all of the rhetoric on neoliberal era being the coup d’état against hard won welfare rights of the so-called golden age of capitalism, welfare spending is rising in almost all parts of the world – be it the US and Europe or Bihar and Tamil Nadu. The rising spending commitments are threatening to overwhelm the larger fiscal environment like never before.

It is unlikely that this ambivalence can last forever. It is futile, in fact, foolish to castigate either the pursuit of growth or democratically driven welfare over the other. The problem is structural. The underclass will increasingly not need to serve its role of the working class to carry on economic activity. Politicians, at least until now, do not have the gall of Thomas Malthus, who proclaimed that the poor should be allowed to just perish. Stalin and Nitish Kumar are transferring money to tens of millions of women because those women are not needed in their economic programme, which is what matters. But they exist on the electoral roll. It’s the price of peace. The most convenient situation, amidst all this, is for capital. It is enjoying its profits and is secure in the peace this democratic balancing act is buying for them.

Hopefully, one day, politics will realize the fraud it is playing on itself. The fault lines which constrain it are not to be found in Tamil Nadu’s linguistic battles or Bihar’s sub-stratification and enumeration of caste battles. The battle lines that matter the most will be between those who are enjoying the ongoing growth-welfare balancing act and those who are having palpitations trying to keep it going. Of course, it has helped capital that its trojan horses have infiltrated the fort of politicians like never before and continue to do it even more. There is good reason to believe that a lot of politicians have now lost track of what is even good for politics in the long-term.