Power crisis to blame for dip in growth rate: Expert

Chennai: With Tamil Nadu’s growth rate dipping below 5 per cent in the recent past from 13.96 per cent in 2005-06, Prof K.R. Shanmugam, director, Madras School of Economics, said the power crisis and failing monsoon were the main reasons for this slide. He also said the state should look for resource mobilisation from other sources as it will not be able to sustain growth only with revenue generated from the sale of liquor through Tasmac.

In an interview to Deccan Chronicle about the current economic situation in Tamil Nadu, Prof Shanmugam said in terms of the rate of medium-term growth, the state had surpassed India’s rate of growth. The state ranked fourth in per capita income.“As for short-term growth, Tamil Nadu is ranked below 15 in all the sectors, including agriculture and industry, even though we are doing better in the services sector,” he said.

Attributing lack of electricity in the state as the main reason for industries to shift out of Tamil Nadu, the economist said when industries did not have electricity to run their machine shops and offices, it made them look for states that provided better infrastructure. This also contributed to Tamil Nadu’s drop in growth rate.

Raising his concern about the recent power tariff hike by the Tamil Nadu Electricity Regulatory Commission (TNERC), Prof Shanmugam said this would further deepen the crisis as industries needed to shell out more money for power.Referring to the government’s dependence on Tasmac for revenue generation, he was of the opinion that no welfare government should mobilise revenue selling liquor even if the money kept the state’s finances in good shape.