T.N.’s economy expected to grow at 8.08% to 10.69% in 2024-25, says study
T.N.’s growth rate varied from 8.08% to 9.44% in 2023-24, and being a ‘better-performing State', its growth is likely to be faster than India’s,: report
amil Nadu’s economy may grow at a rate of 8.08% to 10.69% in 2024-25. Providing these real growth rate gures (as opposed to nominal rates that include the factor of ination), a study on the State economy, conducted by C. Rangarajan and K.R. Shanmugam, chairperson and director of the Madras School Economics respectively, has estimated that in the recently concluded nancial year of 2023-24, the State’s growth rate varied from 8.08% to 9.44%.
The study has taken into account four scenarios (only two of which are given in the table), apart from the ndings that have been arrived at by using a statistical analysis model — autoregressive integrated moving average.
TCommissioned by the State Finance Department, the study said that the country’s expected economic growth rate for 2023-24 was 7.3%. Being a “better-performing State,” Tamil Nadu’s growth would, in all probability, be faster than that of the country’s.
Covering the economic growth between 2005-06 and 2022-23, the two economists said that the State “registered a strong real growth” of 10.3% from 2005-06 to 2011-12 (200405 series), while the all-India growth stood at 8.23%.
However, its average growth rate declined to 6.21% during 2012-13 to 2022-23 (2011-12 series), compared with the all-India gure of 5.73%.
Acknowledging that there was a “downward shift” in the growth path of the country and Tamil Nadu, the authors said this was “also true” for other major States.
“One main reason could be the change in the methodology of computing the Gross Domestic Product and the Gross State Domestic Product from 2011-12,” the authors said.
The State’s economy was hit by three “external shocks”– the COVID-19, the Russia-Ukraine conict, and the hike in interest rates by advanced nations to curb ination. Though it “appears to have recovered almost fully” from the impact of the pandemic, the trend hinted that “Tamil Nadu’s growth is more susceptible to global uctuations than India’s growth pattern”.
The study also called for controlling the growth of public debt, the current level of which “is not supportive to growth,” the study pointed out that “almost all the major States have a similar problem.”.
Tamil Nadu should represent to the 16th Finance Commission for debt consolidation and relief schemes or schemes to write o¥ debt, as the 12th Finance Commission had recommended such measures, the study noted.