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TAMIL NADU STATE BUDGET FY 2013-2014


To: The Right Honourable Chief Minister Dr. J. Jayalalitha

From: Athinarayanan Sanjeevraja

Date: March 11, 2013

RE: Tamilnadu State Budget FY 2013-2014

     Suggestion: Tamilnadu State budget 2013-2014 should strong focus on manufacturing industry which is vital to the State’s economic growth and a major generator of jobs, exports and investment.

Good Evening Ms. Chief Minister. As you knew that Tamilnadu has nearly 700,000 registered micro, small and medium enterprises units (MSME), which is the highest in India. Also, your desire is to see increase in the Manufacturing Sector’s share in GSDP to 23 percent by 2023 to make Tamilnadu is powerhouse for manufacturing in India. Also your desire is to make Chennai the world largest auto hub. If you want to achieve these two, your budget focuses more on manufacturing. If I am not mistaken, manufacturing sector has contributed Tamilnadu’s overall economic growth. In my opinion, the health of our state economy is critically dependent on the health of the manufacturing sector. Global trade is also based on goods not on services. According to WTO (World Trade Organisation) 80 percent of world trade is in goods, just 20 percent is in services. So I request the Tamilnadu government budget 2013-2014 will focus on supporting both global and domestic manufacturing firms to raise their levels of productivity, innovation and competitive.

Ms. Chief Minister, in my opinion, Tamilnadu manufacturing policy is still vain because there is no growth of manufacturing machinery output and technological improvements in that machinery. These are the main drivers of our state economic growth.   In an effort to revive the manufacturing sector, first, focus on raising the productivity because a successful and dynamic economy must be productive. It is not just enough simply to have factories and produce more goods. We need to make the machinery that makes goods. I suggest Tamilnadu government should work closely with manufacturing companies to produce high quality of machineries. For that manufacturing firms are to invest in capital equipment and R & D. We should ensure that our budget try to reduce the input costs of power, freight and commodities, create quality of infrastructure and legal systems and remove barriers to growth for new entrants such as land use restrictions, licenses, clearances to make the Tamilnadu is the most attractive place for both global and domestic manufacturing. Besides we need to revise R & D tax credit to encourage manufacturing sector investments. Moreover, the government should stimulate SME which are among the most innovative or research orientated businesses by lowering their tax thresholds and giving some special capital allowances or adequate credit flow. The idea is to create an environment where it makes sense for SME to reinvest their profits in Tamilnadu in new plants and new equipments to turn promising SME into large successful ones. Our government assistance particularly to SME’s to help local manufacturers connect with supply chains. In addition, our universities and technical training colleges and institutions must be funded to provide best practice programme and encouraging more students to enter the field of engineering and relevant technology that can supply the future needs of the industry. Finally, we need to invest in our State infrastructure and the application of environmentally sustainable technologies.  

Let me conclude it Ms. Chief Minister, there are many drivers owed to government policy help to shape the competitiveness of Tamilnadu manufacturing such as talent – Science & Technology, Innovation, cost of labor and materials, supplier network, energy cost, legal and regulatory system, trade policy and financial but corporate tax reform remain the heart of Tamilnadu manufacturing competitiveness. I hope that our budget FY 2013-2014 will play a key role to make Tamilnadu, the most attractive location for both domestic and global manufacturing companies.   

Ms. Chief Minister, prosperous and sustainable economy relies on manufacturing sector.

Thank you very much for your kind attention and I wish you all the very best for your budget presentation.

Sincere Regards,
Athinarayanan Sanjeevraja.   
Athinarayanan Advisory Authority
Athinarayanan Twitter   

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