There are indications that Tamil Nadu’s economy may return to the pre-COVID-19 level in a couple of months but the State may have to increase its spending to create more jobs at this time, former Reserve Bank of India Governor C. Rangarajan said on Monday.
Mr. Rangarajan submitted a 250-page report of a high-level committee that he headed to Chief Minister Edappadi K. Palaniswami at the Secretariat on Monday.
Assessment
It assessed the immediate and medium-term impact of the pandemic on the State’s economy.
The committee has made a number of recommendations to tackle the economic fallout of the pandemic and the lockdowns. It recommended extension of relief measures, like free rations, beyond November.
Growth projection
“We have assessed the economic conditions of the State. One of the assessments is that in 2020-21, the growth...will be 1.71%. Another assessment shows that there might be a fall,” he told journalists.
Mr. Rangarajan said there were indications from the GST collections, fuel taxes and electricity consumption that the State’s economy was now returning to the pre-COVID-19 levels.
“Also, rural areas have an employment guarantee scheme. We have recommended to the State government to bring in such a scheme for urban areas as well at this time. There is also a fund of ₹3,200 crore for the welfare of construction workers. This has to be spent immediately within the ambit of the guidelines issued by the Supreme Court. The government also has to spend another ₹10,000 crore so that jobs are generated,” he said.
With expenses on medical treatment and sanitation rising during the pandemic, the State should look at spending another ₹5,000 crore for healthcare. “This year, revenues will go down and expenses will go up. Fiscal deficit will be high,” he said.
The Committee also suggested that “the government through the Tamil Nadu Industrial Investment Corporation increase the capital outlay to ₹1,000 crore so that it can provide long-term loans. The government may also set up an industrial township, industrial parks and provide one portion of these to small enterprises and also create a credit guarantee scheme for small enterprises.”
