Tamil Nadu should work towards attracting more foreign direct investment (FDI) to expand airports, roads and ports to provide necessary logistical support to industries, the 15th Finance Commission report tabled in the Parliament recently has said.
The State also needs to establish cable-landing stations (such as those in Visakhapatnam and Mumbai) for increasing the bandwidth for high data speed and to create a digital ecosystem for industrial growth, it added.
Currently, Tamil Nadu accounts for 7% of the FDI that comes into India, the report noted. The Finance Commission also noted that forestry and tourism were sectors with significant potential for the State.
While Tamil Nadu was a pioneer in the production of renewable energy (wind and solar), grid management needed more focus, it pointed out. “Better grid management in renewables can generate substantial streams of future revenue,” the report said.
The Commission also noted that Tamil Nadu needed to be cognisant of its power purchase costs, which have risen over 5% in the last two years, citing a newsletter on the UDAY scheme, by the Union Ministry of Power in 2019.
It also noted that the State needed to upgrade its performance in the metrics set under the UDAY scheme, in terms of smart metering and distribution transformer metering in urban areas.
Tamil Nadu needs a sustainable framework to ensure the management of freshwater as a critical resource, the report said.
Citing the report of the Comptroller and Auditor General of India for the year ending March 2017, the Finance Commission noted that a turnover of 68 working public sector undertakings (PSUs) of the State government was equal to 8.54% of its Gross State Domestic Product, reflecting the important role played by them in the economy.
However, it pointed out that the State should closely monitor outstanding liabilities and substantial budgetary support to State PSUs to avoid contingent liabilities imposing additional fiscal burden. The report also called for a time-bound programme for restructuring of State PSUs to remove major hurdles in their performance.