Rangarajan committee recommends Tamil Nadu govt to come up with urban job guarantee scheme

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September 22, 2020 2:00 AM

Rs 10k cr spend to revive Tamil Nadu economy

The Tamil Nadu government had constituted a high-level committee on May 9 under the chairmanship of Rangarajan.

The Rangarajan committee, set up to propose measures to bring the Covid-19- battered economy of Tamil Nadu back to growth path, has recommended to the state government to come up with an urban employment guarantee scheme on the lines of MGNREGS, increase capital expenditure by Rs 10,000 crore and spend close to Rs 3,200 crore to support construction workers.

The 24-member committee, headed by ex-RBI governor C Rangarajan, on Monday submitted its report to chief minister Edappadi K Palaniswami.

Later, speaking to reporters, Rangarajan said though the state economy was estimated to grow at 1.71% in 2021, there could be a contraction. According to him, it is difficult to predict the exact growth rate at this juncture. However, looking at indicators like GST collections, collections from petrol and electricity usage, the state is heading towards the pre-Covid period in the next two months.

The committee has recommended that the employment guarantee scheme available in villages should be extended to cover urban areas, the free distribution of rice to cardholders should be extended beyond November, an additional Rs 5,000 crore should be allocated to the revenue department, and the state government should immediately utilise the Rs 3,200 crore available in the construction workers’ welfare fund.

That the lockdown to curb the virus spread has affected economic growth is visibly evident now. “The earlier we come out of the lockdown, the better it would be for the state’s economy,” he said.

On the industrial front, the committee has proposed an increase in the capital of Tamil Nadu Industrial Investment Corporation to Rs 1,000 crore so that the organisation can lend long-term.

“Setting up of industrial parks and industrial townships and bringing in the credit guarantee scheme for small-scale industries are other recommendations,” Rangarajan said.

The Tamil Nadu government had constituted a high-level committee on May 9 under the chairmanship of Rangarajan. State finance secretary S Krishnan was appointed as the coordinator of the panel, which sought views from industry bodies, trade associations, stakeholders, economic and other experts in India and overseas.

The terms of reference of the committee included assessing the overall, immediate and medium-term impact of the pandemic on different sectors, reviewing the opportunities and threats in the short- and medium-term, measures required to help important sectors overcome the impact, identify specific reform measures to be taken with the state government’s support, and promote growth of important sectors.

The committee was also asked to analyse the impact of the crisis on the state government’s fiscal situation and the way forward to improve the fiscal position, including increasing the tax-GDP ratio, diversifying revenue sources and re-prioritising expenditure.

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