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Econ0mtc APPRAISAL - ECoN0MtC APPRAISAL 2009-2010 & 2010-2011 EVALUATION AND APPLIED RESEARCH DEPARTMENT GOVERNMENT OF TAMIL\ NADU KURALAGAM, CHENNAI . 600 108 =) 1. STATE OF THE ECONOMY A common thread running through this document is that development is a process of cumulative change that results from forces that raise productivity in each sector of the economy. Capital accumulation is to be interpreted to include productivity – enhancing investment in human resources. Human investment deserves particular consideration in the context of inclusive economic growth. Educational programmes are important not only as a matter of growth policy but also for their important bearing on how the gains from growth will be distributed both among income groups and among various sectors of the economy. 1.1. State Income: The State economy had reached a higher growth plane – it registered a growth rate of 10.36 during 2009-10 and 9.33 during 2010-11 at constant prices. In absolute terms it was ` 353238/- crore and ` 387973/- crore respectively. During the period 2005-06 to 2010-11, the average annual growth in GSDP was at 10.06 per cent – primary sector 4.87 per cent, secondary sector 10.07 per cent and tertiary sector 11.11 per cent. During the 11th Five Year Plan, the overall growth achieved was at 7.80 per cent. Primary sector recorded a meagre 1.08 per cent, secondary sector 8.07 per cent and tertiary sector registered 9.01 per cent. The State metamorphosed from being primary-producing into a predominant service sector. The share of primary sector dwindled from 43.51 per cent during 1960-61 to 8.81 during 2010-11. During the corresponding period, the share of tertiary sector leaf frogged from 36.22 per cent to 60.61 per cent whereas the share of secondary sector increased from 20.27 per cent to 30.58 per cent. Besides the extensive growth taking place in the economy, intensive growth had occurred in the State i.e., the per capita income increased from ` 46886/- during 2009-10 to ` 51117/- during 2010-11, at constant prices the growth rate being 9.02 per cent. A look at the time-series data on district income reveals that there were wide variations across districts in terms of sectoral distribution of income and growth rates. It underscores that the differences in the level of income in lagging districts need to be leveled up in the future development planning. 1.2. State Finance: The understanding incidence of State Budget facilitates evaluating the effects of both Government expenditure and tax policies on the distribution of income in the economy. Factors that contributed to rising revenue expenditure are rising subsidy bills, interest payments, salary commitments to Government employees, etc. The State Budget 2009-10 and 2010-11 and 2011-12 were growth-oriented and had built-in mechanism for poverty reduction, upliftment of social welfare and provision of social safety net for the poor. The buoyancy of General Sales Tax and Excise Duties, Stamp Duty duty and Motor Vehicles Tax was of high order accounting for as high as 88.37 per cent in total States own tax revenue. General Sales Tax continued to be the major source of State’s own tax. Tax effort of the State is influenced by an interplay 1 of factors (i) level of per capita income; (ii) distribution of income; (iii) size of employing establishments; (iv) the size of retail establishments; (v) the distribution of profits by firms; (vi) the openness of the economy; (vii) the extent to which agriculture is integrated into the monetary economy; (viii) the extent of urbanization and (ix) the rapid growth of service sector. The performance of the revenue account during the past four years i.e. from 2005-06 to 2008-09 continued to show a surplus fund. After a longer period of surplus funds, the revenue account had started to show deficit funds during 2009-10(A) and 2010-11(A) i.e. (-)` 353122/- lakhs and (-)` 272869/- lakhs respectively. The revenue deficit of 2010-11(A) over 2009-10 (A) had declined by 22.73 per cent. As per the recommendations of the 13th Finance Commission of bringing the revenue to a nil deficit position in the forthcoming years, it was estimated to have a revenue surplus of ` 53654/- lakhs during the revised estimate 2011-12 (RE). During the financial year of 2009-10 (A), the revenue receipts had increased by 1.46 per cent and revenue disbursements by 10.8 per cent as compared to the revenue account of 2008-09. A higher share of increase in disbursements had resulted in the deficit of the revenue account of 2009-10 (A). Similarly during the financial year of 2010-11(A), the increase in both the revenue components with a lesser share of 22.8 per cent by revenue disbursements compared to 25.68 per cent by revenue receipts had reduced the revenue by 22.73 per cent (` (-)272869/- lakhs). But during the financial year 2011-12 (RE), the increase in both the components of revenue account was estimated to result in a revenue surplus of ` 53654/- lakhs. In contrast to the revenue account, the capital account which had shown a deficit during the three years of 2006-07, 2007-08 and 2008-09 showed a surplus of ` 476899/- lakhs during 2009-10 (A) but showed a fluctuating picture of deficit again to an extent of ` 272264/- lakhs during 2010-11 (A) and was estimated to increase further by 56.4 per cent (` 425939/- lakhs during 2011-12 (RE). 1.3. Agriculture: The agriculture sector continues to be the back bone of the State economy, providing 44 per cent of the total employment in the State. Of the total gross cropped area of 57.53 lakh hectares, the gross area irrigated was 32.38 lakh hectares (56%) and the rest (44%) was under rainfed cultivation. Total agricultural income during 2009-10 (including allied activities) stood at ` 30975/- crores, registering a growth of 6.1 per cent over the previous year in 2008-09. In 2010-11, the income originating from Agriculture and allied activities was estimated to increase by 4.5 per cent to touch ` 32381/- crores. The net area sown stood at 49.54 lakh hectares in 2010-11. The land put to non-agricultural uses marginally increased from 21.76 lakh ha. in 2009-10 to 21.77 lakh ha. in 2010-11. Of the total geographical area, forest accounted for 16.3 per cent (21.25 lakh hectares). The current fallow lands decreased from 11.17 lakh ha. (8.6%) in 2009-10 to 10.15 lakh ha. in 2010-11 (7.8%). The barren and uncultivable land accounted for 3.8 per cent in 2009-10 and 2010-11. 2 The gross area sown and net area sown had marginally improved by 3.2 per cent and 1.3 per cent in 2010-11 respectively. The cropping intensity also increased from 113.9 per cent in 2009-10 to 116.1 per cent in 2010-11. Growth of agriculture, as measured by the Index of Agricultural Production is found to be moderate during 2010-11. Area increased from 78.83 during 2009-10 to 81.39 during 2010-11. Correspondingly, the production also increased from 116.37 to 118.10. By contrast, the Index for productivity had decreased from 113.53 to 111.72. Total food grain production increased from 71.02 lakh tonnes during 2008-09 to 75.06 lakh tonnes during 2009-10 and further to 75.94 lakh tonnes during 2010-11. Acceleration in agricultural production is essential to ensure food security, livelihood security and nutrition security. In this context agricultural sector has to grow at a rate of 4 per cent annually considering the dynamic factors such as rising real per capita income, growing population and income elasticity of demand for food. All the major crops such as paddy, cereals, food grains, sugar cane, cotton, oil seeds, horticulture and sericulture had fared moderately. Thanks to good irrigation management and adequate availability of power and intensive use of high yielding variety seeds, chemical fertilizer, organic manure and bio-fertiliser and application of latest farm technologies, the performance of agriculture was found to be encouraging. Despite this, the performance of agriculture sector is hobbled by diminishing average operational holdings, skewedness in distribution of farmers vis-a-vis number of operational holdings and fickleness of monsoon. Quantum of agricultural output heavily depends upon the occurrence of ideal spatio-temporal distribution of rain fall to a great extent. 1.4. Animal Husbandry, Fishery and Forestry: With regard to animal husbandry sector, the livestock population had increased by 23.32 per cent from 249.42 lakhs during 2004 to 307.59 lakhs during 2007. In the total livestock population, the exotic and cross bred cattle population rose from 25.89 lakhs in 2004 to 33.77 lakhs in 2011, the increase being 30.44 per cent. Due to penetration of white revolution in the State, milk production increased from 67.87 lakh tonnes in 2009-10 to 68.31 lakh tonnes in 2010-11. The per capita availability of milk had steadily been on the rise. It increased from 231 gms. per day during 2005-06 to 269 gms. per day during 2010-11. It may be noted that the delivery of animal health care services had received the attention it deserved. The production of egg also went up phenomenally – 8044 millions during 2006-07 to 11514 millions during 2010-11. Correspondingly, the per capita availability of eggs had been on the increase.
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