C Rangarajan panel for complete unlock to revive Tamil Nadu's economy

CHENNAI: The Tamil Nadu government must lift the lockdown completely, spend Rs 10,000 crore more than budgeted on capital expenditure and use the Rs 3,200 crore construction sector funds lying idle to stimulate economic revival.
These are among the recommendations of the expert committee headed by former RBI governor C Rangarajan set up in May to suggest short-term and medium-term measures to help revive the state’s economy impacted by the Covid-19 pandemic.In its report, submitted to chief minister Edappadi K Palaniswami on Monday, the committee said the state government must find ways other than a lockdown to contain the pandemic.
“Ending the lockdowns is a must to help revive the economy. There are visible green shoots of economic growth going by GST (collections), the consumption of petroleum products, and electricity. The state’s economy could reach the pre-Covid levels in about two months. For this fiscal (2020-21), the state’s economy could either grow by 1.71% or decline. We are not sure how much the decline would be,” Rangarajan said, after his meeting with the chief minister.
“After carefully considering your suggestions, our government will implement those recommendations to help revive the state’s economy and to ensure Tamil Nadu’s growth,” the chief minister said.
Key suggestions include offering employment guarantee in urban areas and extending the distribution of free rice to PDS cardholders beyond November. The rise in the state’s debt burden is unavoidable this year. “The government may have to spend Rs5,000 crore more towards the health sector in fighting the pandemic. More expenditure will act as a stimulus in rejuvenating economy,” Rangarajan said.
Infusing an additional capital of Rs1,000 crore in state-owned Tamil Nadu Industrial Investment Corporation (TIIC) was also suggested. “Promoting more industrial parks and setting aside parts of them for MSMEs will sustain the focus on their revival,” Rangarajan added.
“What finally gets implemented depends on feasibility. There are a large number of recommendations. Some of them we will definitely be implemented and some of them we have already implemented on our own,” a senior government official told TOI.
“Easing lockdown completely depends on the ground situation and we have already been doing it in phases. What is really left are the suburban trains and we need to look at a balance on how to do that. Most other businesses have started. His suggestion to borrow more and not to cut expenditure makes macro-economic sense and we will consider it,” the official said.
As for the Rs 3,200 crore referred to by Rangarajan, the official said the Construction Workers Welfare Board has that sizeable fund raised through ‘construction cess’ of one per cent on civil contracts. The Supreme Court has imposed some restrictions on how that can be spent and it has to be used for the welfare of the construction industry and people involved. “We are devising schemes for it, since we have to use it for their welfare like skilling and providing accommodation. We can use it for the migrant workers, involved in construction, too,” the official said.