His decision comes at a time when the state is witnessing a political churning after the death of chief minister and AIADMK supremo Jayalalithaa and virtual retirement of nonagenarian DMK chief M Karunanidhi.
Amid a thunderous applause from his fans, Rajinikanth, clad in a white kurta, declared, "I am joining politics and it is for sure."
Espousing a new line of "spiritual politics," the 67- year-old actor, whose inimitable style and quick reflexes have won the hearts of cine-goers over the decades, said his (yet- to-be named) party would contest all the 234 seats in the next Assembly polls, due in 2021.
The cine superstar, who has a mammoth fan base, alleged that in democracy, parties were "plundering" their own people and such a system needed to be changed democratically.
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In an apparent indication of keeping his options open for any possible tie-ups in the future, the actor asked his supporters to refrain from criticising or talking about everyday politics.
"Till such time (the launch of the party), let no one make any comment or criticise everyday politics. Those who are already in politics need to do that and we will launch our narrative once we enter the political mainstream," he told his fans here at the conclusion of a six-day-long photo-session meet.
While the ruling AIADMK and the DMK indicated that the development would not affect them, sidelined AIADMK leader T T V Dhinakaran and, actors Kamal Hassan and Amitabh Bachchan welcomed Rajinikanth's political debut.
Batting for honesty in politics and good governance, Rajinikanth said "everything needs to be changed" and declared that "spiritual politics" should be ushered in with transparency sans shades of any caste or religion.
"This is my motto and desire," he said sporting a grey beard and displaying his famed "baba mudra".
"During the era of kings, they plundered the countries of their enemies. However, in democracy, parties are plundering their own people and such a system needs to be changed democratically," he said.
He asked "volunteers" to see to it that attempts to prevent amenities and rights reaching the people were foiled.
Asserting that he will not tolerate nepotism or dishonest dealings, Rajinikanth said, "I want volunteers who will keep vigil and who will not go to any officials, ministers or MPs, or MLAs for selfish needs."
The first task would be streamlining the existing registered and unregistered fan clubs across the state the actor said.
The fan clubs should penetrate every nook and corner of the state, he said and appealed to them to bring all sections of people into their fold.
This would help transforming it into a party and "till then there is no need to indulge in political talk, which includes me," he said, virtually imposing a gag.
The actor's remark is seen as a reference to the bitter infighting in the ruling AIADMK after Jayalalithaa's death and charges and counter-charges of corruption.
Quoting a verse from the Bhagawad Gita, which stresses the importance of doing one's duty and leaving the result to the lord, the actor said, "This is the compulsion of time."
The superstar said contesting the local body polls, expected to be held in the coming months, was not possible in such a short time.
Stressing that the public would be told about the policies and action-plan of the proposed party, Rajinikanth said if such promises "could not be fulfilled we will voluntarily resign within three years."
The superstar's announcement came after his long-time friend and fellow actor Kamal Haasan gave an indication about the latter's political entry.
Rajinikanth began his address hailing the Tamil people who gave him a "life" and ended his nearly 20-minute speech by thanking them, Tamil Nadu and capped it with a "Jai Hind."