Strategic Plan Strategic Initiative

Thrust on manufacturing

The share of Manufacturing in Tamil Nadu’s GSDP declined to 17% in 2009-10 from 20% in 2004-05. The present (2010) composition of the economic output of Tamil Nadu is Primary sector - 12.6%, Secondary sector - 25.8% and Tertiary Sector - 61.6%. Tamil Nadu does not have any significant mineral resources and therefore Agriculture and allied activities comprise the bulk of the Primary sector, while in the Secondary sector, manufacturing activities contributes to 16.6% and Nonmanufacturing activities constituting construction and electricity generation contribute to 9.2% of GSDP. The balance makes up the Tertiary sector comprising a multitude of service sectors, the key ones being financial services, transport, tourism and trade. Given the strong accent in Vision 2023 to accelerate growth in terms of overall GSDP and per capita incomes, it is imperative that all the three sectors need to grow at high rates as shown in the table below:

Sector 2004-05 2010-11 2022-23 Average annual Growth rate (%)
Primary 12% 12.6% 7% 5.1%
Manufacturing 20% 16.6% 22% 13.8%
Non manufacturing 11% 9.2% 8% 9.5%
Services 57% 61.6% 61.6% 11.1%
Total 100% 100% 100% 10.9%

Making SMEs vibrant

SMEs play a vital role in any economy, particularly the developing economies where disparities are pervasive. Tamil Nadu has a strong Micro, Small and Medium Enterprises (MSME) base with nearly 7 lakh registered units, the highest for any state in India. The investment in SMEs is estimated at Rs. 32,000 crore providing employment to more than 50 lakh people which is also the highest for any state in India. A number of natural SME clusters have formed across the state supporting the industrial and service sectors. Tamil Nadu has a solid base of SMEs which can serve as a launching pad for their growth.

The pillars of SME development are:

  • Access to finance
  • Conducive regulatory and policy environment
  • Access to technology
  • Market access
  • Infrastructure availability

Making Tamil Nadu the knowledge capital and innovation hub

The high levels of growth envisaged by Vision 2023 call for high growth rates across all the sectors of the economy. Innovation is increasingly being seen as the language and currency of business and even social processes. Innovation can be defined as a process by which a measurable increase in value (or output) is achieved in any activity that could have commercial or economic value. Such value enhancement (or innovation) could be incremental or substantial and could happen in an organised or systematic manner and sometimes (rarely though) accidentally. Innovation can happen in all types of organisations – academic institutions, commercial business houses, government departments, sports clubs, and in society at large. In general, innovation is associated with new discoveries and invention in science and technology, but it can be argued that innovation is wider than this narrow interpretation. Social innovation happens when groups of people in society find new ways to interact and help each other.

Year GSDP at 2010-11 prices Rs. Crore Investment in infrastructure Rs. Crore
2011-12 634,829 25,393
2012-13 694,503 41,670
2013-14 767,426 61,394
2014-15 848,006 84,801
2015-16 937,046 93,705
2016-17 1,040,122 114,413
2017-18 1,154,535 126,999
2018-19 1,281,534 147,376
2019-20 1,428,910 164,325
2020-21 1,593,235 191,188
2021-22 1,776,457 213,175
2022-23 1,980,749 237,690
Total 14,137,352 15,02,129
Rounded off 15,00,000

The Own Tax Revenue of Tamil Nadu is estimated to increase from 8.7% of GSDP in 2011 to 10% by 2012, and to 11% by 2016-17. Similarly, non-tax revenue as a proportion of GSDP is estimated to increase from the present six year average value of 12.4% to 13% of Own tax revenue of the state by 2012. The share of Central taxes is pegged at 2.58% of GSDP in line with the recommendations of the Thirteenth Finance Commission.

The expenditure on infrastructure creation in Tamil Nadu has been estimated at 5% of GSDP at present (this includes infrastructure creation by government and the private sector). The XII Five Year Plan is targeting an infrastructure creation at the all India level at 10% of India’s GDP. In line with this, Vision 2023 seeks to increase the annual infrastructure spend13 in Tamil Nadu to 10% of GSDP to be achieved by 2015 and further to 12% from 2021 onwards and maintain thereafter at this level.

The following table captures the above governing assumptions for the economy of Tamil Nadu and the investments in infrastructure sector over horizon of Vision 2023 (2012-2023)

The projected GSDP, Investment in infrastructure for Tamil Nadu based on the above assumptions are shown in the following table:

The investments planned under the six heads of Infrastructure under Vision 2023 are as follows:The above amounts are aggregate value of investments over the period 2012-2023.

Key Assumptions Present Projected
Revenue surplus (estimates for 2011-12) -0.25% 1.5% (by 2015)
Fiscal Deficit 3.04% 3% (by 2012)
GSDP Growth (estimates for 2011-12 at constant prices) 9.4% 11% (by 2017) 11.5% (by 2020)
State own tax revenue to GSDP 8.7% 10% (by 2012) 11% (by 2017)
Non tax revenue as a % of tax revenue 9.7% 13%
Share of central taxes as a % of GSDP (13th Finance commission) 2% 2.58%
Infrastructure investment to GSDP 5% (approx) 10% (by 2015) 12% (by 2021)

Funding the infrastructure creation: At present, the three major sources of funding infrastructure are State government (60%), Central Government (25%) and private sector (15%)14. Going forward, the share of the private sector is expected to increase while that of the state and central government will correspondingly be readjusted. The expected funding mix of the infrastructure plan under Vision 2023 is as follows:

Year Investment in Infrastructure (Rs. crore) State Government (%) Central Government (%) Private Sector (%)
2010 25,000 60% 25% 15%
2016 93,705 33% 30% 37%
2023 237,690 28% 30% 42%

The state government will resort to deficit financing (limiting its Fiscal Deficit to 3% of GSDP) and the Revenue surplus (of 1.5% of GSDP) for funding its share of the infrastructure and for funding the social programmes (welfare, subsidies, and other transfer payments) that the State government would have on its agenda.

The success of the Vision is incumbent upon adopting the right strategy to grow. Given the enormity of the task, it is important for the state to build on its strengths. Some segments of the services sector such as trade and transport will grow on the back of manufacturing and agricultural growth. However, with respect to other sectors such as tourism, business and financial services and healthcare, Tamil Nadu will be positioned as a premier destination. Some of the areas where Tamil Nadu can be positioned as a leader are:

  • Back office operations
  • Healthcare
  • Audio and Video - production and post production
  • Tourism

The single most important resource for the success of Vision 2023 would be the availability of trained, knowledgeable and skilled manpower in Tamil Nadu. Without a body of sufficiently skilled and balanced workforce, no economy can hope to develop to its potential. Vision 2023, under its Education and Skills mission, aims to establish a robust human resources pipeline by the following measures:-

  • Providing universal access, equity, quality at primary, upper primary, secondary and higher secondary level
  • Increasing the enrolment in higher education (including vocational education) to over 50%
  • Skill and train 20 million people with focus on employability

Tamil Nadu is richly endowed with fertile lands and agro climatic zones suitable for a varied agricultural produce. During 2009-10, Tamil Nadu produced 75 lakh tonnes of food grains and 108 lakh tonnes of vegetables and fruits. Tamil Nadu contributes approximately 3% of India’s food grain produce, 7% of vegetable produce, 12% of fruit produce and 24% of flower production.