Diversification model will help address risks, says Gokarn

Tamil Nadu has shown resilience during bad times, mainly due to its diversification. This is a good example of diversification being the best way to minimise risks, said Reserve Bank of India (RBI’s) Deputy Governor Subir Gokarn. He noted that the state had reported a 12.5 per cent growth in its GSDP (Gross State domestic Product) in 2011-12 compared to 6.5 per cent of GDP growth.

Delivering his address at Assocham’s seminar: “Vision Tamil Nadu: Building Sustainable Tomorrow” Gokarn said, one of the key reasons for Tamil Nadu’s growth is that it has been driven both by industry and services; industrial base is relatively diversified; there is competitiveness in both labour-intensive and capital-intensive sectors. He noted that industry’s share in GSDP was 30.5 per cent in 2001-02, which fell to 24.8 per cent in 2011-12. This was due to an increase in the contribution of service sector which rose 65.8 per cent in 2011-12 from 52.8 per cent.

He added that agriculture’s contribution had dropped to 7.7 per cent from 16.7 per cent during to the same period and due to the same reason. When it comes to employment generation, 17 per cent came from machinery and equipment, 14 per cent from motor vehicles, 10 per cent from fabrics, 9 per cent from textiles, 39 per cent from other non-metallic mineral products and 5 per cent from food products. He cited the 2009-10 data for this.

“It is important to place strategic thinking in industrial development. Tamil Nadu has been a relatively well-performing state, especially in the last 2-3 years.” Earlier, Rajkumar Dhoot, president, Assocham, said the state has essential facilities that an investor could look for. “Tamil Nadu has one of the most investor-friendly policies, has better infrastructure, a skilled workforce and one of the best functioning Single Window Clearence System and industry-friendly environment to encourage investments in the state.