Such an effort would perhaps not only help in boosting growth at the national level but also pump prime the sagging economy hit by poor consumption demand and slowing World economy. Though Tamil Nadu considered a sleepy state tucked at one southern corner of the country, it has done several pioneering work including noon meal scheme, health care, education and industrial clusters that laid the foundation for rapid economic growth. Now many states have started emulating something that was started 3 to 4 decades ago. Tamil Nadu is now reaping the benefits of this farsighted approach.

China, though hit temporarily by Coronavirus and Sino-US trade war, had invested heavily in education and health during Mao’s era that set the platform for leapfrogging in economic development when Deng Xiaoping opened up the economy in 1979 clocking double-digit growth for nearly 3 decades.

Tamil Nadu Chief Minister Edappadi Palaniswamy, not flamboyant and charismatic like his mentor Late J Jayalalithaa or DMK Supremo Late M Karunanidhi, has gone about his job quietly to fulfil the economic and social roadmap laid out by Jayalalithaa.

Unlike the Union Budget this year, which is like a laundry list of intent, The Tamil Nadu budget presented soon after is more specific and transparent to work on the economic strength of the state to sustain over 8 per cent growth, which it has been nearly clocking in the last few years. This is at a time when India’s economic growth has been sliding for the last couple of years.

The basic strength of the state is that it is a diversified economy, be it industry, services or agriculture. Services accounted for 57 per cents of the economy followed by industry 32 per cent.

A big strength the state economy has is it is historically a diversified economy in terms of industry as well as services. Even in agriculture it is largely diversified so that the state is fairly well insulated from ups and downs,” Tamil Nadu Additional Chief Secretary and finance secretary S Krishnan said in an interview.

When problem is global, the revival is also fast. Because of diversified nature of 15 sub-sectors of industry including auto and auto parts, leather, textiles, electronics hardware, IT and IT enabled services, the state does not suffers much. If auto and textiles are not doing well, leather, light engineering and electronics hardware pushed growth.

In agriculture livestock has increased substantially in Tamil Nadu. “It means a few things, the general status of farmers improved. One is availability of more protein. Secondly farm income goes up substantially. Also 50 per cent of rural income is non agriculture because of good rural infrastructure, transport and a large number of low level industries in rural areas,” Krishnan said adding this also checks urban migration. This is despite the fact that Tamil Nadu is one of the most urbanized states in the country.

The Union budget is for different audience as it is a policy document aimed at bringing about macro-economic balance. But, there is a feeling that the quality of expenditure is increasingly getting lost in the Union budget. Besides, it is increasingly becoming non-transparent. More importantly when there is a fall in revenue collections, the public expenditure takes a hit, which meant the state governments get that much less allocation.

After 14th finance commission recommendations the overall gross state allocation has come down 52 per cent to 49 per cent.

The allocation to states from central pool of taxes remained at around 32 per cent But the difference is that earlier the states had autonomy to spend 16 per cent and the remaining 16 per cent under the direction of the centre. Now what had happened is that the states have autonomy to spend 19 per cent and the remaining 13 per cent under central direction, giving more freedom to states to spend.

More importantly Cess and Surcharge, which used to be mere 5 per cent of overall tax collection has now raised to 18 per cent. Cess and surcharge revenue is not shared with states as they do not form part of divisible pool of resources. In other words, the overall divisible pool of tax revenue, available for sharing with states, have become that much less.

State budgets puts money where the words are, Krishnan said adding in Tamil Nadu schemes and projects are announced throughout the year now and that it, no longer, has to wait for budget day for announcements.

Krishnan said historically Tamil Nadu has invested sufficiently in health and education sectors and hence it has become a favourite destination for investments because of the easy availability of quality skilled work force. Tamil Nadu is not only attracting industries of mass production of items but also value added products across industry, agriculture and services. Now the trend is to attract more of value added production. BPOs no longer attract investment but areas like cloud computing, Artificial intelligence and electronics hardware are areas where investments are pouring in the IT sector in the state.

In health care Tamil Nadu has unique record of 99 per cent institutional deliveries, meaning child birth happen only in hospitals or primary health centre. Of this 68 per cent happen in government hospitals, which have very good facilities unlike many other states.

On the industrial front, “We have largest number of MSMEs among all states in the country. The Global investors meet in 2018 has had a visible impact. I think there is a sense, it is a good place to do business, as the government is accessible. Four or five sectors, we see large investments are suddenly coming in. The second phase of Chennai metro is taking off. A petrochemical complex in Tuticorin is coming up. The manufacturing is growing rapidly,’ Krishnan said.

He said the conversion rate of such global business meet is very high in Tamil Nadu. Of the Rs 3.05 lakh crore investment proposed at the meet, 59 projects have already taken off and 250 odd others are in various stages of implementation, In addition Rs 80,000 crore worth of new investments are proposed including those during the visit of state chief minister abroad a few months back. That apart, since January this year MoUs for additional Rs 60,000 crore industrial investments have been inked. (IPA Service)