At the Tamil Nadu Global Investor Meet (TN GIM), renowned economists Raghuram Rajan and Arvind Subramanian provided insights into Tamil Nadu’s ambitious goal of becoming a trillion-dollar economy by 2030-2031. They emphasized the need for a balanced approach, combining high-skilled manufacturing allied to services in the knowledge economy and low-skilled manufacturing for job creation.
The economists acknowledged the ambitious growth target, highlighting the requirement for an 18 percent growth rate over the next 7-8 years, a feat even China achieved at a lower rate during its peak growth period.
While Rajan favored a focus on high-end manufacturing for greater value addition and faster economic growth, Subramanian emphasized the importance of low-skilled manufacturing in sectors like textiles and footwear, which could provide millions of jobs to the workforce.
“China has a 40 percent market share in manufacturing, and India has 4 percent. Even if we take our share to 15 percent, this is a huge opportunity,” Subramanian stated, underlining the potential for growth in the manufacturing sector.
Both economists agreed on the critical need to skill the workforce adequately to compete with China in manufacturing. Rajan suggested openness to migrants from other parts of the country, while Subramanian stressed the importance of overcoming political challenges associated with migration.
Addressing concerns about Tamil Nadu’s electricity distribution companies’ financial situation, the economists noted its impact on the state’s public debt. They identified the financial condition of electricity distribution companies as a disincentive for private investment in renewables, hindering the state’s transition to cleaner energy.
As Tamil Nadu positions itself as an attractive investment destination, these insights from leading economists contribute valuable perspectives to the state’s economic trajectory.
