Palaniswami, in turn, has promised Rangarajan that the government would consider these measures.
CHENNAI: A high-level committee, headed by former RBI Governor C Rangararajan, on Monday suggested that Tamil Nadu increase the capital expenditure for various sectors and implement an Urban Employment Scheme, among other measures, to stimulate the economy. The committee also hinted that given the consumption of power and fuel after easing of the lockdown, the State may be heading towards the pre-pandemic junction within the next two months.
Handing over its economic prescription to stimulate the economy with short term relief and long term revival to Chief Minister Edappadi K Palaniswami, the committee has given sector-wise suggestions to spur industrial growth and generate employment. Rangarajan also briefed the Chief Minister about the key aspects of the report. Palaniswami, in turn, has promised Rangarajan that the government would consider these measures.
Talking to Express, Rangarajan said, “We think the government can increase the capital expenditure for various sectors provided in the Budget by another `10,000 crore. This will generate employment and lay the basis for future growth. We have also made similar recommendations to stimulate the economy immediately.” Rangarajan said implementing an Urban Employment Scheme for cities and towns is a must in the present situation, given the fact that the rural employment scheme has benefitted many people in the villages.He said the `3,200 crore lying in the construction workers’ fund should be spent for workers to bring back migrant labourers to Tamil Nadu.
“The Inter-State Migration Act should be implemented because that requires registration of all migrant labourers, with a separate regulating body for them,” he said.Coming up with the idea of a better accommodation for workers, he said, “Their residential facilities should be improved. We have suggested affordable housing for them – at least on a rental basis immediately. The government can build dormitories etc., for them.”
The capital for TN Industrial Investment Corporation should also be increased by `1,000 crore to provide long-term finance to industries since the banks are not interested in extending long-term finances to industries at this moment. “We have also recommended industrial towns and industrial parks with all the infrastructure and equipment so that more industrial estates could come up. A particular part of parks or townships should be reserved for MSMEs. A credit guarantee scheme should be implemented for minor industries at the State level,” he said.
“We need a decentralised delivery system for many sectors. For example, in a city like Chennai, there are many government hospitals, whereas they are very few in suburban areas. The government has already announced 2,000 micro clinics across the State. But, for small complaints, why should people move to general hospitals? There should be a larger number of small clinics with one doctor, a nurse and a compounder,” he said.
Talking to reporters, he said the economic process had slowed down in the State due to the pandemic. “We have to come out of this lockdown soon and implement other measures to prevent the spread of infection. As per our assessment, TN’s growth rate would be around 1.71 per cent in 2021 and there is likely to be a slide. We cannot give the exact picture right now. But, the taxes for petrol and power consumption indicate that the State is moving towards a pre-Covid situation. In the next two months, we may be back in the earlier position.” Asked whether there was any recommendation to reduce the tax, he said, “Everyone is asking for reduction of taxes. So, there is no way to hike the tax this year.”
As regards debt burden of the government which stood at above `4 lakh crore, Rangarajan said, “Debt burden will go up this year since expenditure towards the health sector has gone up, while income has come down. According to our assessment, the State government will be in need to spend around `5,000 crore more in the health sector alone this year. So, naturally, the fiscal deficit will go up in TN.”On whether any recommendation were made for increasing per capita income, he said if the government steps up spending, it would lead to economic growth at this juncture. “We have recommended to spend `10,000 crore above the Budget proposals.”
Alternative measures to curb virus
The panel headed by Rangarajan has recommended alternative measures to prevent the spread of Covid and to continue supply of free rice beyond November