Tamil Nadu’s FY23 Budget is All About Growth, Employment Opportunities and New Industries Satyakam Arya, Chairman of CII, Tamil Nadu State Council .Over the years, Tamil Nadu has emerged as an economic powerhouse, being the second highest contributor to India’s GDP. It is the most industrialised state in the country and a favourable destination for new investments, moving swiftly towards becoming a hub for electronics-related technological transformation. The FY23 TN budget is clearly focused on the mid to long-term priorities of the state for achieving a sustainable socio-economic growth. Backed by a sound long-term shared vision of all stakeholders, industry, and government, Tamil Nadu’s economy has demonstrated sustained growth over the years, and is on its way to achieve its vision to becoming a $1 trillion economy by FY 2030-31. The budget presented by Palanivel Thiaga Rajan, the Finance Minister of Tamil Nadu approaches critical needs to become future-ready and to make the environment conducive for new industries to proliferate. The TN 2022-2023 Budget was presented to strengthen the fiscal position of the State without increasing the tax burden of the taxpayers, increasing youth employability, attracting new investments, and data-driven governance. The reduction of the fiscal deficit from 4.33% to 3.80% is a great achievement of the State Government despite the pandemic situation and lockdowns during the last fiscal year. Tamil Nadu is an attractive destination for industrial investments and the supply chain sector plays a crucial role in enabling the growth. The pandemic has affected the supply chain and hence stability in the entire value chain will take time. Robust supply chain infrastructure is a crucial element for growth in the manufacturing sector and it is important to improve the overall efficiency in the sector while trying to accelerate demand for logistics services. Additionally, the ongoing war in Ukraine can disrupt the global economic recovery. In such a scenario, the Government’s allocation of Rs 50,000 crore towards the construction of industrial parks in Vellore and Coimbatore, and another allotment of Rs 32,667 crore to the industries department for the development of logistics and supply chain systems is a great step. An improved supply chain infrastructure will directly result in improving the ease of doing business, which will in turn make Tamil Nadu a lucrative market for manufacturing. Further, to boost the development of the real estate projects, FM has proposed to increase FSI or Floor Space Index along the Chennai Metro Rail corridor. The state budget allocated Rs 3,200 crore for the Prime Minister’s Model Housing Board scheme, and another Rs 500 crore for the construction of 1,000 more homes for members of the Irular tribe. The implementation of announced projects will increase connectivity and yield benefits for the logistics sector and the construction industry. With higher spending allocated for the infrastructure sector, this is significant considering that the government aims to boost employment opportunities and strengthen the economy of the State. The Budget has also strongly focussed on developing industries, encouraging MSMEs and Start-ups. Among MSMEs, the Budget announced an allocation of Rs. 50 crores for the development of 20 micro-clusters, including artificial jewellery making by Narikuruvars in Kancheepuram district, toy cluster in Madurai district, cookware cluster in Tirunelveli district, and cashew processing cluster in Cuddalore district. An important aspect here is that the government is paying attention at the grass root level or at the bottom of the pyramid to capitalize on traditionally available skills and provide impetus to developing them as an industry. It ensures economic growth and employment across the state. These are all smaller than the micro-units and they might not always require infrastructure for growth but rather address issues like their need for design inputs or visits to other clusters. Tamil Nadu is also the largest producer of coir in India. The Government has taken a proper note of it by ensuring to set up a Tamil Nadu Coir Business Development Corporation in Coimbatore for developing the coir sector to popularize value-added coir products made in Tamil Nadu like Geo Textiles and coir pith in the domestic and export markets and to develop coir industry across the State. In this case, one big-ticket budget allocation is the sum of Rs 5 crore as seed capital in the first phase for the proposed Tamil Nadu Coir Business Development Corporation. The State Government is also proactively working in meeting the demand for skilled man power. This is evident from the special fund of Rs.100 crores that will be created to build the necessary public infrastructure for export organisations in Tamil Nadu. This fund would be utilized to set up skill centres, testing centres, export warehouses, and inland container depots, with contributions from industries and industry associations. The agricultural sector has great potential to provide an essential contribution to employment opportunities and work quality. Sustainable and continued growth in the agricultural sector can act as a catalyst and make significant contributions to the fight against poverty and can lead to an increase in the household incomes of the people involved in the agricultural sector. The TN Budget rightly addresses this as the Tamil Nadu Agriculture Budget for 2022-23 emphasizes the use of technology like IoT, drones, and remote sensing, besides envisaging a role for industries and other allied departments to ensure remunerative prices for farmers and enhancing employment opportunities in the farm sector. Further, an industrial estate for agro products will be set up in Tiruvarur district by Tamil Nadu Small Industries Development Corporation (TANSIDCO) to ensure remunerative prices to farmers for their products which will further generate employment opportunities. It is also good to see that many of the recommendations of CII have been accepted by the Government which includes an upgraded single window system for CMDA, increasing of FSI to encourage transit-oriented development and the adjoining areas of the outer ring road of Chennai, Start-up Centre at Nandambakkam, regional start-up hubs at Madurai, Tirunelveli and Erode, increased funding for Chennai-Kanyakumari industrial corridor and the Rs. 5750 crore, 20 km double-deck flyover from Chennai port connecting Maduravoyal, to reduce congestion, bring more logistical efficiency and to have a great connector for multi-modal logistics. In the coming years, we are expecting the Government to push for more investments in the Southern districts of Tamil Nadu which lack industries and infrastructure for the overall economic development of the region. Another aspect is focus towards renewable energy generation whether it is wind power or solar power. Tamil Nadu already has a sweet spot in terms of highest number of sun days in a year and is also conducive for generation of power harnessing wind. The government should encourage further investments and make it easier for industries to switch to renewable energy sources as early as possible. I believe that future footprint decisions by global corporations will also take into account whether the investment destination provides a conducive atmosphere to have a low carbon footprint right from the beginning. Further, there must be a speedy implementation of the Chennai-Kanyakumari Industrial Corridor (CKIC). The Corridor is likely to generate over 4.7 million additional jobs, driven by an annual manufacturing output of $222 billion. Overall, the TN Budget is futuristic, inclusive, and propels economic growth. However, all these plans will only have a positive impact when there is proper execution. The Government and private sector will have to come together to develop sector-specific industry clusters with excellent and competitive infrastructure and an end-to-end ecosystem of value chains like suppliers and service providers. If there is no gap between the announcement and implementation, Tamil Nadu is going to witness a spur in economic growth.
