In the early 1990s, Punjab, Haryana, and Maharashtra were the most prosperous in terms of real per capita income among the major states of India. Tamil Nadu wasn’t anywhere close to the leading states and was similar to West Bengal.
Today, Tamil Nadu has left Punjab and West Bengal far behind and has closed the gap with Maharashtra, though it continues to be somewhat behind Gujarat and Haryana.
Per capita real income relative to Tamil Nadu
Source: Authors’ estimate based on the Ministry of Statistics and Programme Implementation (MoSPI) data
Despite its unparalleled economic rise, Tamil Nadu’s performance remains notoriously poor in terms of basic household infrastructure such as water availability, and low access to piped water and sewerage connections. Only around 31 per cent of the population had access to piped water in their dwellings in 2015-16 compared to the average of 57 per cent in Maharashtra, Gujarat, Kerala, Haryana, and Punjab, as per the National Family Health Survey (NFHS). Per capita water availability in Tamil Nadu is 900 cubic meters compared to the national average of 2,200 cubic meters, with resultant over-exploitation of groundwater.
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Rise of Tamil Nadu
Why did Tamil Nadu succeed? And what’s in store for the future and what are the social and economic areas that the state needs to improve on? Two key factors have played major roles in the rise of Tamil Nadu – the initial conditions when the Indian economy was opened up in the early 1990s, and the role of government policies in promoting the private sector.
Tamil Nadu was much more industrialised by the 1980s, with manufacturing accounting for nearly 26 per cent of its GDP, much higher than the all-India average of around 15 per cent in the same period. Tamil Nadu also had a better stock of human capital supported by a relatively good education system with a cultural approach that strongly enforced the importance of education. In 1980-81 the gross enrolment ratio for primary education in Tamil Nadu was much higher at 67.4 compared to the all-India average of 30.7.
The positive influence of better initial conditions was reinforced by relatively business-friendly policies and the expansion of higher education. As a result, labour-intensive manufacturing such as automobiles, auto components and textiles has remained strong, with the manufacturing sector contributing nearly one-fourth of the real gross value added in 2019-20, absorbing excess labour from low productivity agriculture. Over the years, as tertiary education and the availability of skilled labour increased, the IT/ITES sector grew, allowing the second generation of young adults to move into higher productivity skilled services.
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Growth has been less unequal
Tamil Nadu has followed controversial social inclusion and welfare policies, partly aimed at electoral gains, such as free distribution of consumer durables. It has a near-universal coverage of the public distribution system (PDS), which not only provides highly subsidised food grains but is also used to distribute cash support and gift hampers during festivals. In 2011-12, PDS was used by 73 per cent of rural and 64 per cent of urban households. Tamil Nadu is one of the first states in India to provide nearly free basic food to urban poor, who are usually left behind in terms of welfare policies, and has one of the better-run public childcare facilities and healthcare system.
Given its differences with other states regarding the nature of economic transition — Tamil Nadu’s growth has been more broad-based, with a twin focus on manufacturing and services, alongside the government’s welfare policies, a priori — one would expect the state to be more equal compared to the non-agriculture-driven peer states of Gujarat and Karnataka. (See Table 1 here for a comparison of these states’ economic structures)
To test this in our ongoing research work, using unit-level data from NFHS, 2015-16, we construct a welfare index as an equally-weighted average of three sub-indices – 1) Consumer durables index (taking into account possession of 20 different consumer durables including television, refrigerator, computer and vehicles; 2) Basic services index (piped water supply, toilet facility etc.); and 3) Housing quality index (type of house, number of rooms etc.). We then take the all-India median value of these indices and check the percentage of households in a state that lies below this median value. Among its peer group, Tamil Nadu has the lowest percentage of population below the median value of the all-India welfare index (Graph 1).
Percentage of population below the all-India median value of the welfare index
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Moving forward
The primary focus of Tamil Nadu going ahead should be the removal of the long-standing infrastructure issues such as water availability, piped water and sewerage connections, and social issues such as high rates of domestic violence. Moreover, although Tamil Nadu has done well to tackle communicable diseases, the state ranks among the top in the prevalence of non-communicable diseases such as diabetes and cardiovascular diseases.
The fiscal deficit of the state has increased to 5.4 per cent of gross state domestic product in 2020-21 against the budget estimate of 2.4 per cent and compared to 3.2 per cent for 2019-20, as per a report of India Ratings and Research. The slippage is a result of a combination of a shortfall in revenue receipts and an increase in state expenditure as a consequence of the Covid-19 pandemic that needs to be corrected in the subsequent years.
Tamil Nadu is ageing and the availability of labour may cause a problem if inward migration is not encouraged. Any move towards the job quotas for the local people, similar to those announced by states such as Haryana, would be detrimental for Tamil Nadu.
Vidya Mahambare is Professor of Economics, Great Lakes Institute of Management. Sowmya Dhanaraj is Assistant Professor of Economics, Madras School of Economics. Views are personal.
Sankalp Sharma, postgraduate student at Madras School of Economics, contributed to the research work.
(Edited by Prashant Dixit)
Ofcourse farmers in Punjab are given free electricity and other subsidies and they don’t want industrialization, and they want jobs as well, then to the contrary they sell their lands to send their children abroad to be a mason. People here have a very rigid mindset, if they talk in other language than Punjabi they’re called as up/Bihar’s mason or majdoor, this is why Punjab is not growing, it needs Industrialization more than ever, Chennai has 2/unit electricity for households, 8/commercial , guess what Punjab’s household electricity is greater than that of Chennai’s. People have to come out of their Khalistani or religious bubble to see the reality.
Ofcourse farmers in Punjab are given free electricity and other subsidies and they don’t want industrialization, and they want jobs as well, then to the contrary they sell their lands to send their children abroad to be a mason. People here have a very rigid mindset, if they talk in other language than Punjabi they’re called as up/Bihar’s mason or majdoor, this is why Punjab is not growing, it needs Industrialization more than ever, Chennai has 2/unit electricity for households, 8/commercial , guess what Punjab’s household electricity is greater than that of Chennai’s. People have to come out of their Khalistani or religious bubble to see the reality.
Author says that TN already had a strong industrial base by the 80s. This was mainly due to excellent governance and implementation by stalwarts such as Kamaraj, C Subramaniam, R Venkataraman, Bhaktavatsalam and later Annadurai. Their contribution to national progress tends to be forgotten in the cacophony of self praise and image building that we hear nowadays.
Looks like you are trying to let the bjp alliance gain vote by trying to create a scenario saying TN is far behind… That’s not possible with these kind of uninformative articles!!
I had 3 Tamil maistry to renovate and construction of the building at different periods, I found they don’t come to work, take amount and tell trust me but they do hoch poch work and behavior was bad and tell lies , waste materials etc.i will entertain only Bihar worker’s , lost peace of mind
Great Article, If One Takes The Punjab Breadbasket Of India From The Graph The Early 1990s/ 1990/1991 The State Was Under Presidents Rule In Disturbing Conditions But Was Still Seeing Growth And Development Which Carried On When Mr Beant Singh Took Charge In 1992 Right Upto December 1995 Haryana And Maharashtra Were The Other Top Tier States Credit Must Also Be Given To The Short Tenures Of Mr V.P. Singh And Chander Shekhar Before Mr P.V Narsimha Raos Govt Came To Office. And Officers Like Mr S.L. Kapur And Mr A.S. Chatha In Punjab And C.Ms Of Haryana/Maharashtra And The Enterprising Men/Women From These States. Corrupt Self Interest Politicians Leading Govts From 1996 Onwards Have Caused These Places To Decline.
Tamilnadu is bearing the freebies of other states also as center is taking gst from us and giving only 0.47 to us. The tide can change and so the people. V believe in our hard work and education. Not earlier or now v depend on center, center is depending on us. U aliens are taking money from us and abuse us. Remember this is the Dubai for many of u. Believe the locals quota can empower many of us to stay at home and earn peacefully.
It’s good Tamil Nadu is growing but it’s not Dubai for us.dubai is way ahead.stop your insecurities if u comment like u will listen abuses
Clearly you want to secede.
So you mean to say when any natural calamities happen other states should stop sharing the pain . Personal tn is the worst state to live in if any person try earn a living . Prices of food prices of rental home and prices of other thing are high. If only people think and arrange band encourage people from other States to live in TN then it could open many doors .I would recommend take example of Hyderabad even a low earning people can survive there coz the city have affordable food ,rental homes and good behaving .Truth is people from other states will go out sooner or later due to such reason.
The statistics pertaining to availability of piped water in households are misleading and false. Tamilnadu has much higher average number of households with good sanitation and water facilities. The authors are not well researched and have carelessly presented data which might be harmful for those who are seeking knowledge through online media. Kindly correct the facts and add an addendum to your report by correcting the information.
We need more of these articles. Enough with the cast equation, secularism and electoral violence blah blah blah.
Economic comparison and development on social indicators… Suck comparisons is what is necessary for normal Indian to THINK Development. Vikas as PM Modi would call it!!
Good job!!
Comparing TN and Punjab is like chalk and cheese. While Punjab has been staying afloat be blackmailed MSP and max procurement, the other states dont become a parasite on Centre for decades. Punjab has no locus standing in terms of growth and contribution to economy of the nation.
Who ever wrote this news is an evil intended being half baked rotten news
BJP speaks of Atmanirbhar Bharat which is mainly a lip excercise. But TN has been practicing it since long and the fruit of it is seen by all. So no surprise at all. The people of TN will find solutions for their problems by themselves.
TN doesnt need inward migration…we are good in managing our own shortfalls….Jai TN
Well said. We don’t need inward migration.
The biggest and core reason for Tamil Nadu’s rise in industry was freight equalization policy. TN grew at the expense of Jharkhand/Bihar, Odisha and Chhattisgarh/MP. But not for long, tide is turning, and fast. Lookout for the rise of Uttar Pradesh as the preeminent wealthy state of India.
That will be good for entire country.
The happiness index of different states including Tamil Nadu might have added to the understanding as to how the people are comfortable in terms of water supply to house holds and sewage connections. The storm water drains are used as sewage drains with chocking at many places as people throw everything into open drains.
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Will the authors and researchers please write a separate report on who bears the expenses of the freebies offered by political parties. What is the factual position state wise ever since this practice started.
Will the authors and researchers please write a separate report on who bears the expenses of the freebies offered by political parties. What is the factual position state wise ever since this practice started. Who finally bears the cross.
I am a Keralite living in Tamilnadu for more than 3 decades. Tamilians are very hardworking, honest, sincere and enterprising people. They are very generous and like to help everyone. These qualities in the majority of Tamilian people make them successful. We all like Tamilians and like to see them prosper because they are humble even when they are rich and successful. May God bless the people of Tamil Nadu!