Chennai: When finance minister O Panneerselvam presents the state budget on Thursday, there’s a fact that will be troubling him — Tamil Nadu’s economic growth for 2012-13 is the lowest in the country at 4.14%, even below the national GDP of 4.9%.

The continuing power problem has affected the manufacturing and services sectors, which are the backbone of the state. TN is the only state to fall below the national average, according to figures released by the Planning Commission. This is also the lowest rate the state recorded since 2005-06.

“TN has been hit harder than others states by the slowdown,” said Planning Commission member Abhijit Sen. “Had the power situation been handled better, it would have aided smooth operation of small and medium industries, which would have boosted the growth rate.” A poor monsoon and the lack of water for irrigation affected farm output. Agriculture slowed with a negative growth rate of 12% and manufacturing fell to -1.3%.
The national slowdown and a range of local factors turned the growth story on its head — high-performing states like TN and Punjab recorded the lowest growth, while Bihar recorded the highest growth at 24.9%. ‘National slowdown hit growth of states’
Chennai: Bihar, with 24.9% growth, outstripped the national average for financial year 2012-13, and recorded the highest growth among all states. Tamil Nadu’s growth rate was just 4.1%, lower than the national GDP growth of 4.9% for 2012-13.
However, Tamil Nadu attracted more investments last year, CM J Jayalalithaa’s said in the assembly recently. “The government has cleared projects worth 29,558 crore, of which 10,660 crore has been invested in the state,” she said. Sixteen more industries expressed interest in investing 42,400 crore in TN, she said.

But there’s no getting away from the fact that the state’s GDP has been dropping for the past few years. Tamil Nadu’s growth rate rose from 10.8% in 2009-10 to 13.12% in 2010-11. Since then, it’s been downhill — 7.42% in 2011-12 and now the drop to 4.14%.
Tamil Nadu is not alone — most states have fared badly — but Bihar, Rajasthan, Madhya Pradesh and Uttar Pradesh have all recorded growth above the national average of 4.9%. Madhya Pradesh recorded 10% and Uttar Pradesh 7.9%. Sen attributed their growth to the fact that these states have a low infrastructure base, requiring projects to be implemented. “The slowdown affected growth in all states. Local factors like lack of water for irrigation, electricity for industries and frequent agitations compounded the problem,” Sen said.
Most states recorded poor or negative growth in agriculture due to a poor monsoon. Punjab’s negative agriculture growth pulled down its overall growth rate to 5.2% in 2012-13 from 5.9% the previous year.

States with mining reserves — Maharashtra, Madhya Pradesh, Andhra Pradesh and Haryana — recorded negative growth in the sector for a second year. Mining and quarrying in Andhra Pradesh declined from 8.7% in 2011-12 to -1.66% in 2012-13. Maharashtra improved its performance to -1.9% compared to -5.5% the previous year. Orissa and Jharkhand, with considerable mining reserves, recorded significant growth, boosting their gross domestic product.

“The mining industry has been affected by bans and lack of clearances. This is the main reason for negative or poor growth in the sector. In some cases, companies have not started work in mines despite receiving clearance. This caused a glut in the market,” said former finance commission member D K Srivastava.



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