Introduction to Tamil Nadu economy - Tamil Nadu PCS Exam Notes

Introduction to Tamil Nadu economy

Tamil Nadu is the southernmost state of Indian peninsula.It Borders with (Union Territory of) Pondicherry, Karnataka, Kerala and Andhra Pradesh. Biggest part of Tamilnadu make boundary with Bay of Bengal, Gulf of Mannar and Palk Strait in south and most part in Indian ocean. Tamilnadu is 11th largest state by area, 6^th largest state by population. It is also second largest economy after Maharashtra with Dollar 220 billion state domestic product. Per capita GDP of Tamil Nadu was $2,200(- Rs.1,43,547 at current prices (2015 – 16) ) in the year 2014–15, the third highest in India.The state’s HDI is second among large states and socio – economic development status is much higher than the national average. With a population of 72 million, of which 80 per cent are literate, Tamil Nadu is an innovation – based economy with a strong performance in manufacturing and services.

Over 49% of the state is urbanized, accounting for 9.6% of the urban population in the country. Services contribute to 45% of the economic activity in the state, followed by manufacturing at 34% and agriculture at 21%. Government is the major investor in the state with 52% of total investments, followed by private Indian investors at 29.9% and foreign private investors at 14.9%. It has been ranked as the most economically free state in India by the Economic Freedom Rankings for the States of India 2014-15.Gross state domestic product (GSDP) of Tamil Nadu grew at a compound annual growth rate (CAGR) of 12.31 per cent between 2004-05 and 2015-16, reaching US$ 175.33 billion in 2014-15. Even after the effects of drought and demonetisation during the previous financial year of 2016-17,Tmilnadu clocked a growth rate of 7.94%, about one percentage point less than that of the previous year. Political instability followed by the death of former Chief Minister Jayalalithaa could also have played a dampener.

Economy of Tamil Nadu
Statistics
Gross domestic product (GDP) Growth Rate 14.86 %	₹13.39 lakh crore (US$210 billion) (2016-17)
GDP rank in India	Second
GDP per capita	₹143,547 (US$2,200) (2015-16)
GDP per capita rank	3^rd
GDP by sector	Agriculture : 21% Industry: 34% Services: 45% (2014-15)

Gross state domestic product(GSDP) of Tamil Nadu at market prices

Year

Gross state domestic product

( IN CRORES INDIAN RUPEES)

2015

976703

2020

2183000(estimated)

SNAPSHOT FOR STATES ECONOMIC ENVIRONMENT:

Highly industrialized with greater level of urbanization.
Among the states with highest FDI.
Rich labour -pool with low cost of labour.
Facilitating infrastructure.
Good living standard and low crime rate.
Stable political environment.

Tamil Nadu has a well-developed infrastructure with an excellent road and rail network, three major ports, 23 minor ports, and seven airports across the state providing excellent connectivity. As of June 2016, Tamil Nadu had a total installed power generation capacity of 26.25Gigawatt (GW).

Tamil Nadu ranked second as the most economically competitive Indian states in 2016, based on selective criteria – macroeconomic stability, financial, business and manpower conditions, quality of life, infrastructure development and government factor. It is one of the three most preferred states for business investments and the state ranked second behind Maharashtra in GDP. Foreign investments attracted during the last five years is double that of the foreign investments from 2000 to 2011.

EDUCATION sector:

The Gross Enrolment Ratio in higher education at 42 percent is the highest in the country. The State’s net enrolment rate is at 99.85% and 99.11% at the primary and upper primary levels. To sustain growth the state has initiated many innovative flagship programmes Like- Distribution of laptops ;the special cash incentive of Rs.5000 per child to reduce dropouts at secondary level.

AGRICULTURE:

Agriculture is the primary occupation of about seventy percent of the rural population of Tamil Nadu. In 2008 Tamilnadu was second largest producer of rice. Total cultivated area was 5.6 million hectare 2009-10. Cauvery Delta is known as rice bowl of Tamilnadu. Tamil Nadu accounts for 10% of fruits and 6% of vegetables production of India. Annual food grain production of fruit in 2007-8 was 100.3 million metric ton(mmt).

Tamil Nadu is the largest producer of turmeric, banana, flowersand tapioca. Second largest producer of mango, natural rubber, coconutand groundnut. Third largest producer of coffee, teaand sugar cane. Tamil Nadu is also leader in livestock poultry and fish production.Tamilnadu accounts for 17.7% of total poultry production in India.

With change in science and technology, agricultural practices in Tamilnadu have undergone radical improvement since independence. The change is visible not only in agricultural practices but also in the type of crop grown. In the recent few years secondary and tertiary sectors have also grown in great proportion, thanks to the New Economic Policy of the Indian government.

The main food crops that are grown in Tamilnadu are Rice, pulses and oil seeds while the important commercial crops of the state include sugarcane, tea, rubber, cotton, cashew and coconut. Multiple cropping, use of new and better varieties of rice, sugar, cotton, and millet coupled with the use of chemical fertilizers have tremendously increased the agricultural output of the state. Tamil Nadu has a 1000 km long coastline with equatorial climate, permitting year round fishery and farming.

INDUSTRIES:

At present, Tamil Nadu is one of the most industrialized states in India. Many factors have combined together to make Tamil Nadu a leading industrial stte. The state has a well-developed network of roads, rail, air and major ports at Chennai and Tuticorin. Cotton ginning, spinning and weaving are the traditional industries of Tamil Nadu. Other important and heavy industries of the state are automobiles, diesel engines, motorcycles, sugar, fertilizers, cement, agricultural implements, iron and steel, chemicals, transformers and paper. Everything from railway coaches, automobiles, tractors, battle-tanks, motorbikes and heavy vehicles are manufactured in Tamil Nadu. The rail coach factory at Perambur is one of the largest in Asia while the heavy vehicles factory, which produces tanks, is located at Avadi. The Chennai seaport is one of the most important ports in India. Tamil Nadu is rich in metals and minerals like limestone, gypsum, bauxite, salt, Mica, quartz, magnetite, lignite and iron ore.

HEAVY INDUSTRIES AND ENGINEERING:

Many heavy engineering and manufacturing-based industries are located in and around Chennai, which is nicknamed as the “The Detroit of Asia”. Global auto giants like Hyundai, Ford, BMW, Caterpillar and Mitsubishi as well as domestic heavyweights like MRF, Ashok Leyland, TI cycles of India, Mahindra & Mahindra, Royal Enfield, TVS and TAFE Tractors have their manufacturing units around Chennai. Tamil Nadu has network of 113 industrial parks and estates offering necessary infrastructure for development of industries. In heavy industries and Engineering Coimbatore is also referred to as the pump city as its supplies to requirement of motor and pumps.

HANDICRAFT:

The traditional handicrafts industry also flourishes in Tamil Nadu. Notable among them are handloom silk, leatherwork, metal icons, kalamkari (hand-painted fabric, using natural dyes), brass, copper wares, bronze, palm leaf, carved wood and cane articles. Tamil Nadu is an important exporter of coffee, spices, yarn, tea, tobacco, handicrafts, engineering goods and granite.

LEATHER AND TEXTILE:

Textile and Leather is one of leading sector and the state house for country’s largest spinning industry of about 80% of total installed capacity of India. According to Tamilnadu Government the textile industry in Tamilnadu account for 17% of total invested capital in all industries. Coimbatore is called Manchester of South India due to its cotton production and textile industries. The estate account for 70% of leather tanning capacity in India and for 38% leather , footwear and components production.

Key Sectors:

Accounting for about 34.35 per cent share in the overall spun yarn production of the country during 2015-16, spun yarn production in Tamil Nadu stood at 0.97 million kg, by the end of September 2015.
Tamil Nadu has 21.20 per cent share in overall automobile exports from India. The state accounted for a 15.80 per cent share in domestic production and 14.90 per cent share in domestic sales of the automobile sector in the country.
The Government of Tamil Nadu announced plans to invest US$ 607 million over next two years for the development of heavy engineering sector of the state.
Tamil Nadu had 16 operational SEZs for IT/ITeS as of July 2016. Tamil Nadu has about 350,000 people directly employed in IT and ITeS companies, while 750,000 through indirect employments. The number of registered IT units in the state increased from 1,114 in 2004-05 to 1,780 in 2014-15.
As of 2015, cement production in the state was 30 million tonnes, whereas capacity utilisation rate was at 61 per cent. The production of ready-mix concrete is a major activity of the cement industry in the state.
During 2015-16, financial assistance of US$ 7.94 thousand was provided to the entrepreneurs under the plan scheme for technological up-gradation, establishment and modernization of food processing industries.
The Government of Tamil Nadu has set up industrial estates and common effluent treatment plants for the leather cluster.
Tamil Nadu plans to add 5,000 MW capacity in the wind power by the end of 2017. Global Wind Energy Council is also working to assess the potential of wind energy in India with special emphasis on Tamil Nadu.
During 2015-16, the work on the project of “Infrastructure Development Investment Programme for Tourism”, which has been taken up at a cost of US$ 20.62 million, was under process.

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