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Lakshmi Subramanian
Lakshmi Subramanian

TAMIL NADU

Amid political uncertainty, TN records lowest growth rate

manufacturing.reuters28617 Tamil Nadu's manufacturing growth rate dipped to 1.65 per cent | Reuters

Tamil Nadu was pushed out of the best performing states' list with a drastic dip in manufacturing, tax revenue and investments

Exactly two years ago, the then Tamil Nadu chief minister late Jayalalithaa dreamt of a numero uno position for her state. The Global Investors Meet 2015, presided over by her, had attracted a whopping Rs 2,42,160 crore investment to push the state to be a leader in the manufacturing and the service industry.

However, seven months after Jayalalithaa’s death in December 2016, the state has recorded the lowest growth rate, both in the manufacturing and the service sector. The tax revenue, too, fell by 3 per cent. The State’s Own Revenue (SOR) fell to Rs 1 lakh crore in July 2016 as against an estimated Rs 1.19 lakh crore.

According to the data released by Reserve Bank of India and Central Statistics Office, Tamil Nadu has recorded the lowest growth rate in the manufacturing sector. The growth was only 1.65 per cent over last year, while the neighbouring Andhra Pradesh and Telengana recorded an increase of 10.36 per cent and 7.1 per cent respectively. Manufacturing sector in Tamil Nadu had seen a growth of 7.11 per cent in 2015-16 when Jayalalithaa was the chief minister.

“There are two reasons for this. The political uncertainty is a major deciding factor for the new multi-crore investors to come in. The second reason is the uncontrollable corruption in every department of the state, right from taking a No Objection Certificate for setting up a small facility,” says Rajaram Subramanian, a small time businessman in Chennai. Rajaram’s automobile spare parts manufacturing company at Ambattur in Chennai has witnessed 4 per cent dip in revenues this year due to lack of new orders. 

Tamil Nadu's Gross State Domestic Product (GSDP) also showed a dip. The GSDP at factor cost, which was Rs 751.48 lakh crore in 2011-12, is only 133.87 lakh crore in 2016-17. 

Since 2013-14, the state has not witnessed the expected increase in the State’s Own revenue (SOR). The SOR, which was Rs 83,061.38 crore in 2013-14, stands at just Rs 1 lakh crore in 2016-17, while the estimated increase was Rs 1.19 lakh crore. 

In these two years, the state attracted only Rs 25,000 crore investments though MoUs worth Rs 2.42 lakh crore was signed in 2015. Of the 98 memorandums signed then, only 36 have set up operations in Tamil Nadu. “Sixty-two are still in the pipeline,” says a senior IAS officer in the state government.

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Topics : #Tamil Nadu

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