Economists Raghuram Rajan and Arvind Subramanian, members of the Tamil Nadu Chief Minister’s Economic Advisory Council, on Sunday said the government’s goal to make Tamil Nadu a $1 trillion economy by 2030 is ambitious, but doable.
“To achieve the goal, the State has to grow 18% for the next seven to eight years. No country at any point of time has done 18% ever. China has grown for 10-11% over 40 years,” said Mr. Subramanian at a fireside chat organised on the topic ‘The Big Bets for Tamil Nadu’s Trillion Dollar Economy’ as a part of the Global Investors Meet 2024 (GIM 2024).
“If there is a State in India that can achieve this, it is probably Tamil Nadu. I am excited by the things happening in the State over the last six months,” he said.
Mr. Subramanian added that large-scale factories, having a workforce of 40,000, were beginning to be established in Tamil Nadu.
China’s slowdown
China’s share of global exports in labour intensive sectors is 40%, while India’s share is 35%. “With China slowing down, there is a huge opportunity,” he said.
If China drops to 35% and India can take its share to 12%, it would make a huge difference, Mr. Subramanian said.
Echoing Mr. Subramanian’s view, Mr. Rajan said it was a good time to set an ambitious goal and try to reach it.
Value-added manufacturing
However, both differed on the path. While Mr. Rajan pitched for focusing on value-added manufacturing and services, Mr. Subramanian said that low-cost manufacturing would create more employment opportunities for the unskilled workforce. Both economists also felt that while Tamil Nadu’s debt level is high, it is not a matter of concern when compared to other States.
One of the problems is the debt of the State power utility, and this needs to be addressed, they said.
On the topic of lower devolution of taxes by the Centre to southern States, including Tamil Nadu, both Mr. Rajan and Mr. Subramanian said States should retain more funds.
