CHENNAI: Amid the Covid pandemic, Tamil Nadu has been a rare bright spot in the country, having shown robust economic recovery. Officials say the State continues to remain one of the most attractive investment destinations, thanks to the efficient manner in which it has handled the Covid crisis.
One of the most industrialised States, Tamil Nadu had clocked higher economic growth rate than the national average for three consecutive years. However, the State’s growth engines came to a halt when the lockdown was imposed in March. A top government official told Express that in April, the State managed to earn Rs 2,052 crore, a drop of 75 per cent (-75%) compared to last year’s revenue (Rs 8,544 crore). “But the recovery has been rapid since then,” said the official highlighting how the Covid strategy of conducting more tests paid off.
While Tamil Nadu showed the way by rapidly ramping up Covid testing, some industrialists were worried that the rise in cases would be detrimental to the State’s image. But policy makers, rather than heeding to the request, went ahead with the testing. “We were the only State to do RT-PCR tests rather than going in for other tests,” said the official. And this paid off in controlling the pandemic and ensuring the confidence of the international agencies like the World Bank.
Asian Development Bank, JICA and the Asian Infrastructure Investment Bank. Even the investors vouched for the State as many MoUs were signed up. While the State’s share of Central taxes and grants from the Central government (which include a revenue deficit grant of Rs 40 billion, equivalent to 0.2 per cent of GSDP, awarded by the 15th Finance Commission) may be delayed due to Covid, the State hopes to manage the situation as it has been permitted to increase the borrowing.
“We will be getting loans at a reasonable rate,” said the official.Meanwhile, it is learnt that the State government’s medium-term fiscal statement, presented in mid-February 2020, together with the State’s budget, contained an optimistic narrative at a time when the impact of Covid was expected to be modest and short-lived.
The fiscal deficit was expected to narrow gradually until financial year 2022-23 from just under 3.0 per cent of GSDP in financial year 2019-2020 to 2.8 per cent in FY 2020-2021 and further to 2.6 and 2.5 per cent in FY21/22 and FY22/23, respectively. But, the projections have been put in the backburner as the pandemic has been hovering for nearly five months.
Interestingly, the State constituted a high-level committee headed by former RBI Governor C Rangarajan to assess the overall immediate impact of the pandemic on different sectors of State economy. The committee will be able to able give a forecast about the state of economy, said the official.
High testing paid dividends