Tamil Nadu’s economy may revert to pre-COVID-19 levels in 2 months, says expert committee

File Photo (ANI)

Chennai: Tamil Nadu's economy may revert to pre-COVID-19 levels in about two months, an expert committee has said based on the revenue from GST collections, petrol and power consumption. They also pegged the state’s economic growth at 1.71% for the year 2021, while expressing caution about a possible further dip.

The committee submitted its report to Tamil Nadu Chief Minister Edappadi K Palaniswami at the Secretariat on Monday. 

Led by Former RBI Governor C Rangarajan, the committee was appointed by the Tamil Nadu government in May to suggest measures for economic recovery after the pandemic-induced slump and the period of inactivity during the lockdown.

The 24-member committee sought views from industry bodies, trade associations, stakeholders, and experts in economics from India and abroad. 

The major recommendations of the committee include the rolling out of an Urban employment guarantee scheme (similar to rural employment guarantee scheme), hiking the capital expenditure by Rs 10,000 crore and also expeditiously spending the Rs 3,200 crore in the construction workers welfare fund to generate employment opportunities. 

Speaking to reporters, Rangarajan pointed out that the state’s debt would only increase this year, owing to the higher expenditure on the healthcare front and lower-income to the state’s coffers. However, he suggested that the government must ramp up its spending amid times of low demand. 

Also mentioned was the recommendation to increase healthcare spending by Rs 5000 crore.

The committee recommended the extension of free distribution of rice to cardholders via the Public distribution system (PDS or ration shops) beyond November. 

In terms of the industrial sector, the committee has recommended increasing the capital of Tamil Nadu Industrial Investment Corporation to Rs 1,000 crore so that the organization can lend long term.

“Setting up of industrial parks and industrial townships and bringing in the credit guarantee scheme for small scale industries are other recommendations,” Rangarajan said.

Tamil Nadu, known as the automobile hub of India is among the states that are worst hit by the coronavirus. The state has recorded a total of 5.36 lakh positive cases, of which 4.81 lakh have recovered.

Over 46,453 cases are active in the state and about 8700 individuals have lost their battle to the deadly virus.