Why in News? Tamil Nadu (TN) is India’s No.1 state in terms of economic complexity, measured by the diversity of its gross domestic product (GDP) and employment profile.
The Data- TNs lower dependence on agriculture is matched by the higher shares of industry, services and construction in its economy relative to all-India. About 45.3% of TN’s farm GVA comes from livestock subsector (the highest) which surpasses all-India average of 30.2%. It is home to India’s largest private dairy company (Hatsun Agro Product), broiler enterprise (Suguna Foods), egg processor (SKM Group) and “egg capital” (Namakkal).
Factors Contributing to TNs Economic Transformation-
Cluster-based Industrialization: Medium-scale businesses (with Rs 100 crore to Rs 5,000 crore turnover) are driving TN’s economic transformation. Industrialization here has been more spread out and decentralized, via development of clusters. Some of the clusters- agglomerations of firms specializing in particular industries are well known like Tirupur for cotton knitwear; Coimbatore for spinning mills and engineering goods. Most of these are in small urban/peri-urban centres, providing employment to people from surrounding villages, creating diversification options outside agriculture, reducing the proportion of TN’s workforce dependent on farming. For example, Tirupur’s knitwear industry alone today employs some 800,000 people, including migrants from Uttar Pradesh, Bihar, Jharkhand, Odisha, Assam and other states.
Entrepreneurship from below: The decentralized industrialization is being driven by entrepreneurs from more ordinary peasant stock and provincial mercantile castes. Many of which have created successful brands like Hatsun (‘Arun’ ice-cream and ‘Arokya’ milk). TN’s entrepreneurial culture consists of diverse communities like Christians (MRF, Johnson Lifts and Aachi Masala Foods) and Muslims (Farida Group). “Entrepreneurship from below” combined with TNs high social progress indices from public health and education investments probably explains TN’s relative success in achieving industrialization and diversification beyond agriculture.
