Tamil Nadu: Thoothukudi signals the beginning of the end of AIADMK

When Tamil Nadu Deputy Chief Minister O Panneerselvam announced the permanent closure of the operations of Sterlite Industries at Thoothukudi (Tuticorin) on Monday evening, he did not realise that he was committing another blunder.

The move came six days after the police fired on agitators protesting the pollution generated by the copper smelter plant of Sterlite Industry. The police firings claimed 13 lives, evoking widespread shock and outrage.

Panneerselvam’s announcement was aimed at salvaging the dented image of the government due to the firing, and came on the eve of the opening of the Tamil Nadu assembly session. Analysts said that the ‘fire’ would be doused by this move but perceived that this would have a serious impact on future foreign investments in Tamil Nadu.

Vedanta Plc, which owns Sterlite Industries, is listed on the London Stock Exchange. “I know it is believed to be a highly polluting unit. But the government had allowed this plant to run for 20 years. Now if you close it permanently just overnight, investors are not going to take kindly to this whimsical move from the state government. Now they will think twice before investing in such a state,” the president of a large corporate based out of Chennai said.

Sterlite has been operating the 4,00,000 tons per annum capacity copper smelting unit at the site and was proposing to raise it to 8,00,000 tons per annum at a cost of US $500 million.

“I suspect that with the state government pulling in multiple directions, the police is not taking orders from anyone in Tamil Nadu. In such circumstances usually the civil administration moves in and takes charge but now they too are unwilling to take decisions,” says the retired secretary quoted above.

In the aftermath of the firing, the state government did nothing to cool the frayed nerves and the chief minister E Palaniswami justified the action. It is only later when the government realised the massive fall-out of the incident, and in a knee jerk reaction decided to permanently shut the plant that has remained closed since March.

It is unlikely however that the state government has planned for the legal recourse that the company will surely seek. Polluting or not, the company will argue that the firing took place around the Collectorate area that is a few kilometres away from the site of the plant and was a result of a law and order problem. Sterlite was just a ruse for the violence, they will argue. They might also seek financial compensation for the potential loss incurred.

The permission for the contentious plant was given by six times chief minister late J Jayalalithaa in her first term in 1994. The project was initially planned for Ratnagiri in Maharashtra, but public agitations forced it to relocate to a new site in Tamil Nadu’s Thoothukudi. However the problem was that it was in the ecologically sensitive Gulf of Mannar area that is home to hundreds of rare varieties of flora and fauna.

So long as Jayalalithaa (or even the DMK) was in power, the state administration was in tight control and the ministers had no powers to take decisions or even speak publicly. Even if she was doing a patently wrong thing, all that party men could do was to gape: such was her hold over the public.

But the death of Jayalalithaa has opened a Pandora’s box with multiple factions in her party All India Anna Dravida Munnetra Kazhagam (AIADMK) sniping at each other. Although there is no imminent threat of the present AIADMK government falling, the expectations are that it will ultimately collapse. Analysts expect that thereafter the party will itself go under and their leaders would run off to either BJP (that is desperately looking for an opening in the southern state) and the DMK. The incidents at Tuticorin can be understood properly in this background.