Tamil Nadu's task ahead

THE UNSAID MESSAGE in the Annual Plan allocation for Tamil Nadu is that the State has its task cut out for the years ahead in fine-tuning its economic policies even while ensuring a continuity with the past. Several crucial issues lie unsaid in the decision to step up the Plan allocation by Rs. 340 crores to Rs. 6,040 crores for 2001-02. The first is that it comes as an endorsement of the State's economic performance. It is also indicative that mobilisation of resources has largely been consistent with projections made during the first four years of the Ninth Plan. Yet, it is not the case that there is cause for total comfort. The more important statement behind the allocation is that the State will have to now address itself to the task of finding adequate resources. As in several other States, the Tamil Nadu Government will have to find solutions to basic questions of economic policy and public finance. For, howsoever appreciable the growth in tax revenues may appear, the State will have to focus on mobilisation of non-tax revenue to reduce its high levels of borrowings and thereby check its growing debt burden. It is against a paradoxical setting of a well-performing economy contrasted with a declining state of finances that Tamil Nadu will have to embark upon its Plan allocations for the year ahead.

An important issue that will have to be addressed by the State Government is a fundamental one: the extent to which it will continue as an active economic player. Central to this will be the policy it will adopt on the length to which the State will go in restructuring its public sector undertakings (PSUs). A starting point in this exercise should be the realisation that the State's PSUs, which were started to give a fillip to industrialisation, have started to haemorrhage the economy. That a continuation with the present approach will only mean a further erosion of the State's finances has been brought out by studies that remain unimplemented. The past decades of functioning of the public sector are ample evidence that the trickle-down benefits have been far short of expectations and in several enterprises run counter to the development of the State. It is now imperative that the Government commences a fair and transparent approach to restructure its 67 PSUs - of which 42 have been incurring losses - consistent with the advice rendered by professionals and experts. Diverting the investments made in loss-making and non- strategic PSUs will only mean a stepping up of allocations for basic infrastructure including roads, health services, education, water supply and sanitation which should be the core concern of the State. For those enterprises that the Government finds it necessary to continue its operations, steps should be taken to ensure that these are run along business lines and their public accountability enhanced considerably. A meaningful start would be in making public the performance of the State's PSUs.

The Deputy Chairman of the Planning Commission, Mr. K. C. Pant, has brought up several other core issues during his meeting with the Tamil Nadu Finance Minister, Mr. C. Ponnaiyan. The emphasis on power tariff restructuring is one that will have to be taken serious note of by the State Government in the years ahead. Needless to say, power tariff revisions are politically sensitive, but this should not come in the way of setting the finances of the State Electricity Board in order. The correctives called for by the Planning Commission - on the financial management front as well as in the restructuring of PSUs - should be seen as a serious and well-intentioned perspective made in the long-term interest of the State and appropriate steps taken so that Tamil Nadu retains its position in the national economy.

Send this article to Friends by E-Mail

Section  : Opinion
Previous : A thoughtless move
Next     : The Freedom of Information Bill