Event ReportsPublished on Dec 22, 2016
The first industrial estate zones in India came up during the 1960s when R. Venkatraman and C. Subramanian were ministers under Chief Minister K. Kamaraj.
Tamil Nadu industrial growth steady

Tamil Nadu will never have a 'Page 3' or even a 'Page 1' industrialist, however big he or she may be. It is mainly due to the Tamil psyche, according to Sushila Ravindranath, Consulting Editor of The Financial Express.

"We tend to be self-critical and revel in anonymity. Most business houses are family-run, their promoters hold close control of the firm and are media- shy. Many large businesses and conglomerates rooted in the state also have under-developed equity," she told an interaction on Tamil Nadu Economy: Prospects & Problems at the Chennai centre of Observer Research Foundation.

Sushila said that Tamil Nadu has witnessed tremendous industrial growth both in the pre and the post liberalisation eras. The growth story has been consistent since the early years after independence, irrespective of the party in power in the state. Both the Dravidian parties in power since 1967, and the Congress Party earlier, encouraged entrepreneurship and industry. The first industrial estate zones of the country came up during the 1960s when R. Venkatraman and C. Subramanian were ministers under Chief Minister K. Kamaraj. Politicians and bureaucrats have played a major role in charting Tamil Nadu's growth trajectory, observed Sushila.


Elaborating further on Tamil Nadu's industrialisation from the 1960s till the 80s, Sushila said that the state had several business houses which manufactured a wide range of products from auto-parts, abrasives, to bicycles, mainly to severe as import substitutions. In the heydays of socialism, these companies manufactured products in limited quantities prescribed by the government. Hence there was no sense of scale and their growth was restrained. Nevertheless, these companies helped the economy chug along by providing employment, and more importantly creating a skilled workforce, especially in the automobile sector.

Commenting on the inclusivity of Tamil Nadu's economic growth, Sushila said that the state has performed well, both in terms of material growth and human development indicators. A combination of targeted economic policies and welfare schemes has resulted in the growth of industry and human capital in the state. Development of port facilities and state highways that connect hinterlands has ensured development even across districts. The mid-day meal scheme, preventive healthcare policy, liberalisation of higher education and the much controversial reservations in education and government jobs have all helped build a skilled, educated labour force which forms a corner stone of the growth story.

Many social welfare schemes that originated in Tamil Nadu have been adopted at the national level, the mid-day meal programme being the most popular one. Despite the proven track record of these welfare policies, we hardly publicise the outcomes or the social benefits they've delivered, opined Sushila.

Sushila said that Tamil Nadu is as entrepreneurial as Gujarat, Maharashtra or any other state. Tamil Nadu has dominated the automotive scene from the early years the 1960s, almost all auto majors such as Hyundai, Ford, Renault, and BMW have their production facilities in and around Chennai. The city has several auto ancillary hubs and highly skilled workforce, which makes it the most preferred destination.

Apart from Chennai, the Tiruppur-Coimbatore-Salem belt known as the Manchester of south India, sports a large cluster of textile industries. Several other districts in Tamil Nadu such as Namakkal, Karur, Thiruchengode, etc. have all carved a niche for themselves, excelling in a particular trade or industry. When compared against Karnataka that has a larger share of PSUs, Tamil Nadu is far more industrialised and urbanised, much of the credit goes to the entrepreneurs, opined Sushila.

Quality revolution

Many Tamil Nadu companies had been pioneers in quality revolution. TVS was the first company in India to receive the Deming and ISO quality certifications. When the export market was opened in early 1990s, TVS became the biggest exporter of auto parts. Similarly, the Murugappa group has stake in myriad businesses, from sugar, finance to fertilizer. TAFE (amalgamations group) is the largest producer of small tractors in the world.

Apart from these yesteryear business houses, there are several entrepreneurship success stories in the new millennium such as Lion Dates, Sakthi Masala, Ramraj Cotton, Cavin Kare etc. Despite their successful business models most of these companies do not get enough media coverage nor are any case studies done on these companies, observed Sushila.

Welfare schemes

Commenting on social welfare schemes, Sushila said that it is fashionable to sneer at the state's welfare schemes, but there is a subtle upside to these schemes. The low-cost rice programme and other subsidy schemes has benefited the marginalised and BPL population, thereby keeping a check on social discontent and violence.

Many 'freebies' such as television sets, mixer grinders have helped instill a sense of prosperity among the rural masses. While it is common to criticise our politicians for doling out freebies in return for votes, one must not under estimate our political class. Both parties understand that economic development is essential to support the welfare schemes, hence policy making is always geared towards encouraging industry, trade and businesses, noted Sushila.

This report is prepared by Deepak Vijayaraghavan, Associate, Observer Research Foundation, Chennai.

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