PONDICHERRY: CONGRESS RETAINS POWER WITH DMK

UNCLAS CHENNAI 001002

SIPDIS

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PINR IN
SUBJECT: PONDICHERRY: CONGRESS RETAINS POWER WITH DMK
ASSISTANCE



1. (SBU) SUMMARY: Congress Chief Minister N. Rangasamy
returned to power in the Union Territory of
Pondicherry, forming a minority government with the
external support of the DMK and other allies. A
cluster of four former French enclaves in South India
with a total population of one million, Pondicherry,
despite its small size, received much attention from
the Congress central leadership during the campaign.
END SUMMARY


2. (SBU) The Union Territory (UT) of Pondicherry is a
group of four former French colonies in South India
with a total population of one million. Two of the
four enclaves, including the UT capital, Pondicherry
town, are located inside Tamil Nadu while the other
two are in Kerala (Mahe) and Andhra Pradesh (Yanam).
As the name indicates, Pondicherry is not a full-
fledged state but one in which the Union Government
retains more administrative powers.


3. (SBU) Political alliances of Pondicherry usually
resemble those of Tamil Nadu but with a major
difference: here the Congress party has the upper hand
over the Dravidian parties. In the May elections, the
Congress won 10 seats in the 30-member Territorial
Assembly. Among its allies, the DMK won 7, the PMK 2
and the CPI 1. On the opposition side, the AIADMK won
3, the MDMK 1 and the Pudussery Munnetra Congress
(PMC),a Congress splinter faction, 3 seats. Since
the Congress alone does not have majority in the
Pondicherry assembly, the DMK and the other allies
give external support to the minority Congress
government. Party leaders consider it quid-pro-quo
for the similar support the DMK receives in Tamil Nadu
from the Congress party.


4. (SBU) N. Rangasamy, born 1950, was sworn in Chief
Minister on May 18. A veteran Congress politician and
a bachelor, he enjoys much grassroots support due to
his unassuming manner and accessibility. Post's
business contacts, however, believe Rangasamy is not
dynamic enough to spur economic growth. Despite its
small size and small economy (Gross State Domestic
Product approx. $1 billion),Pondicherry had succeeded
in attracting investments from companies such as IBM,
Acer, HCL, Wipro, Whirlpool, Hindustan Lever, Larsen
and Tubro, MRF, Chemfab, Berger, and Henkel. Business
leaders believe that under efficient administration,
Pondicherry has the potential to grow further due to
its proximity to Chennai and the growing south Indian
market.


5. (SBU) COMMENT: Congress President Sonia Gandhi's
April 25 campaign stop in Pondicherry indicated the
importance the party attached to winning the UT
despite its small size: it counts as one state where
Congress remains in power. The 80 percent polling
recorded in Pondicherry indicated the intensity of the
campaign. With the election now over, it is doubtful
if Pondicherry will continue to receive such attention
from the Center, attention that might help it develop
its economy. END COMMENT.

CANDADAI