Our Bureau Tamil Nadu government is thinking of coming up with multiple categories of projects and funding options. Right now, the government does everything with 100 per cent equity right from building toilets to class rooms in corporation schools to bus stands. This is not an efficient model. It may be a good model for rent-seeking and politics but not for development and growth, said Finance Minister Palanivel Thiaga Rajan.

While for building toilets and classrooms for a corporation school, the government will not get any revenue and 100 per cent of equity has to come from the government. However, constructing water systems or pipeline, the government can get partners with expertise and execution skills that it does not have, he said in an interaction with R Dinesh, Managing Director, TVS Supply Chain Solutions, at the CII Global Economic Summit on the topic Tamil Nadu: Driving Growth, Sustainability and Jobs.

‘Monetise where possible’

This is like what the Government of India is doing — monetise some of the cash flows ahead of time for the next 10-15 years during the course of the development and try to adopt a BOT or PPP or a hybrid development programme. There are some projects that are pure ‘cash cows’ from Day One with predictable cash flow where the government can be an equity partner for the sake of removing roadblocks, and find 74:26 financing, he said.

For example, the new bus stand in Madurai under the Smart City programme was a bad project, and 100 per cent waste of capital, he claimed.

Political will and administrative skill are required for this change. In the last few years, both were missing. “Now, we have the luxury of a leader who has a very clear vision and people like us who have a history of executing relatively complex systems, and officers who bring in the administrative skills,” he said.

‘Potential exists’

From 2014 to 2021, the data says that the financial and economic indicators in Tamil Nadu have gone down. “However, despite this, we are confident of achieving the $1-trillion economy goal by 2030 as there is an unlimited potential and market opportunity, if we get some basic things right,” the Minister said.

Keeping a relatively constant exchange rate requires a nominal growth rate of 13 per cent for the next ten years. If inflation is taken at 5-6 per cent, the 7-8 per cent of real growth, the goal is easily achievable, he said.

“We have an advantage and are already starting at a depressed level because of the Covid pandemic and we have a bit of a low-base effect. In fact, the estimates for GSDP this year is marginally higher than what it was two years ago. That’s at a nominal level. We think we are one of the few States that didn't have an actual GDP growth rate last year during the pandemic,” he said.

“There is buoyancy not only in our revenues but also Union revenues, we think this is sustainable. There is a concrete plan by sectors as part of the cycle for the next ten years, we think it is very realistic. We have a lot of natural resources; we can fundamentally transform policy and efficiency,” he said. The government is looking at data centric, accountable and systems-based check and balance within the ecosystem kinds of governance, he added.