CHENNAI: There are indications that Tamil Nadu’s economy might return to pre-Covid levels in a couple of months but the State might have to increase its spending to create more jobs at this time, former Reserve Bank of India Governor C. Rangarajan said on Monday.
Mr. Rangarajan submitted to the government a report of a high-level committee that he headed to assess the immediate and medium-term impact of the pandemic on the State’s economy.
“We have assessed the economic conditions of the State. One of the assessments is that in 2020-21, the growth of the State will be 1.71%. Another assessment shows that there might be a fall,” he said after submitting the report.
Mr. Rangarajan said there are indications based on the GST collections, taxes on fuel, electricity usage that the State is moving to pre-COVID 19 levels. The committee has also recommended extension of relief measures such as provision of free ration by a few more months.
“Also, rural areas have an employment guarantee scheme (MGNREGS). We have recommended to the State government to bring in such a scheme for the urban areas as well at this time. There is also a fund of Rs. 3,200 crore for the welfare of construction workers. This has to be spent immediately within the ambit of the guidelines issued by the Supreme Court. The government also has to spend another Rs. 10,000 crores so that jobs are generated,” he said.
Expenses on medical and sanitation has gone up during the pandemic and the State needs to look at spending another Rs. 5,000 crores for healthcare. “This year, revenues will go down and expenses will go up. Fiscal deficit will be high,” he added.
