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Tamil Nadu’s economy will revive to pre-Covid-19 level in two months, said former Reserve Bank of India Governor C Rangarajan, who headed a high-level committee to advise the State government on the medium-term response and measures to be taken to boost the economy post the lockdown period.
While one estimate says that in 2020-21, the State’s growth rate will be 1.71 per cent, another predicts there could be a contraction due to the pandemic. At this juncture it is difficult to predict the exact growth rate. However, looking at indicators like GST collections, collections from petrol and electricity usage, the State is heading to the pre-Covid-19 period in the next two months, Rangarajan told newspersons after presenting the report to Chief Minister Edapaddi K Palaniswami.
The committee had recommended that the employment guarantee scheme available in villages should also be extended to urban areas, the free distribution of rice to card holders should be extended beyond November, an additional ₹5,000 crore should be allocated to the revenue department, and the State government should immediately utilise the ₹3,200 crore available in the construction workers’ welfare fund.
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The lockdown to curb the spread of the virus has affected the economic growth. To stop the virus spread other measures should be taken up. “The earlier we come out of the lockdown, (the better) it (would be) for the State’s economy,” he said.
On May 9, the State government constituted a high-level committee under the chairmanship of Rangarajan, currently Chairman of the Madras School of Economics. Earlier in the Manmohan Singh government, he had headed the Prime Minister’s Economic Advisory Council.
State Finance Secretary S Krishnan was the coordinator of the 24-member committee, which interacted and sought views from industry bodies, trade associations, stakeholders, economic and other experts in India and overseas.
The panel’s members include N Narayanan, former Chief Secretary; A Vellayan, former chairman of Murugappa Group; N Srinivasan, MD, India Cements; Venu Srinivasan, Chairman, TVS Motors; Padmaja Chunduru, MD, Indian Bank; PN Vasudeven, MD and CEO, Equitas Bank; M Suresh Babu of IIT Madras; Pinaki Chakraborty, Co-ordinator, UNICEF, Chennai, and senior officials from various State government departments, including finance, industry, agriculture, IT and MSME.
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The terms of reference of the committee included assessing the overall, immediate and medium-term impact of the Covid-19 pandemic on different sectors, assessing the opportunities and threats in the short term and medium term, measures required to help important sectors overcome the impact, identify specific reform measures to be taken with the State government’s support, and promote the growth of important sectors.
The committee was also asked to assess the impact of the crisis on the State government’s fiscal situation and the way forward to improve the fiscal position, including increasing the tax-GDP ratio, diversifying revenue sources and re-prioritising expenditure.
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