Vellore:
The present status of
the Tamil Nadu economy came in for a detailed discussion at the 84th
annual conference of the Indian Economic Association held at Vellore
Institute of Technology (VIT), Vellore, recently.
Tamil Nadus economy is said to be one of the progressive ones in
the country. Not any more, say economists. Kicking off the session, P
Jegadish Gandhi, secretary, Vellore chapter of the association says
the states economic and fiscal trends since the mid-nineties do
reveal certain disquieting features. "The gross state domestic
product (GSDP) growth the total value of the goods and services
produced in an economy in a year has declined from 6.66 per cent
during 1991-1996 to 6.22 per cent during 1996-2001."
Similarly, he says, the
income from the primary sector (agriculture) witnessed a downward
slide from 4.33 to 2.66 per cent during the corresponding period. The
performance of the secondary sector (industry) also dipped from 6.92
per cent during 1991-96 to 4.14 per cent during 1996-2001.
"But the tertiary (services) sector has gone up from 8.07 per
cent to 9.47 per cent during the same period. This is due to the
contribution mainly from the private sector. But in the period 1990-91
to 1999-2000, the revenue expenditures grew from Rs 5,638 crore to Rs
20,278 crore. And, the revenue deficit swelled from Rs 550 crore to Rs
4,400 crore," he says.
Referring to the recent hike
and partial rollback in the states bus and power fares, he calls
for a greater discussion and transparency if hard economic decisions
are to be given effect to. "Such exercise is imperative, given
the conceptual shift that is taking place in the nations economy,
where the states role as an economic player is getting
redefined."
"The Tamil Nadu
government can raise anything between Rs 25,000 crore to Rs 30,000
crore if it privatises the 17,000 bus routes," says VIT
chancellor G Viswanathan, also a former state minister. Castigating
the government for failing in its primary duty of collecting taxes, he
says "the sales tax arrears are an alarming Rs 7,244 crore and it
will be a big relief for the state government if even half of that is
collected."
The bad financial position is
mainly due to a lax in tax collections, higher interest outgo, pension
payments and subsidies. Says state Planning Commission member K V
Palanidurai: "Interest payment has gone up to Rs 3,299 crore from
Rs 455 crore during 1991. Similarly, pension payment shot up to Rs
3,000 crore from Rs 321 crore a decade back."
The food subsidy also went up to Rs 1,570 crore from Rs 270 crore in
1991 as the state government decided to bear the increase in the
Central issue prices. Palanidurai says the state government could not
increase its collections through taxes, as the tax-GDP ratio is one of
the highest in the country. The financing of the VIII and IX Plan was
done mostly through borrowings and interest payment has emerged as a
major expenditure item.
"The state will not be
able to achieve the IX Plan growth rate as the agricultural growth for
the past two years is negative," he says. On the agriculture
front, the net sown-area remains static or on the decline while the
fallow land is high. And incremental production is expected from more
intensive use of land for which water availability is crucial.
"Here again, the state
has fully harnessed the surface water potential, and the ground water
exploitation reached alarming proportions leading to environmental and
ecological problems," says Palanidurai. "The state is
witnessing a deceleration in the growth rate with the IX Plans
targetted growth rate unlikely to be achieved. Also, the secondary
sector, especially the manufacturing sector, is also not doing well
with a growth of less than 3 per cent per annum."
Given this situation the
state is preparing for the X Plan (2002-2007). The Central Planning
Commission in its approach paper has set a target
of l8 per cent GDP growth. "In the past, Tamil Nadu has always
set a target growth equal to the national target, or slightly higher.
The same will be followed now," says Palanidurai.
To achieve this, the state
has to have an investor-friendly policy to set up investments from the
private sector, reform its tax system, develop infrastructure and
balance the budget deficit by phasing out the revenue shortfalls, he
says.
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