Tamil Nadu's Economy: Industry, Finance and the Welfare Model — Practice

Question 1

Which agency develops industrial parks in Tamil Nadu?

Accepted Answer

SIPCOT, the State Industries Promotion Corporation of Tamil Nadu, formed in 1971.

Question 2

Which town is known for knitwear exports?

Accepted Answer

Tiruppur.

Question 3

Describe the structure of Tamil Nadu's economy.

Accepted Answer

Services form the largest part of state output and manufacturing is the second pillar, with agriculture contributing a smaller share. Manufacturing is broad, covering automobiles, electronics, textiles and leather, and the state has a high urban share and the largest number of factories among states. Exact shares should be taken from the latest Economic Survey.

Question 4

Why should an investors' meet MoU not be quoted as investment?

Accepted Answer

An MoU records an intention to invest. Only a part converts to projects, and conversion takes years, so it is a commitment, not actual investment.

Question 5

Name five features of Tamil Nadu's state finances.

Accepted Answer

Large own tax revenue from commercial taxes, stamps and excise; liquor retail revenue through TASMAC; heavy welfare and subsidy expenditure; FRBM limits on deficit and debt; and a separate agriculture budget since 2021.

Question 6

Examine Tamil Nadu's argument on devolution of taxes.

Accepted Answer

The state says it contributes more to the national tax pool than it receives and that population-linked criteria penalise states that controlled population growth, so its share has fallen over successive Finance Commissions. The Centre's case is equity: poorer, populous states need more support. A balanced reading suggests a formula that rewards both need and performance, with transparent data, and notes that the figures must be checked for the current commission.

Question 7

Assess the Tamil Nadu development model.

Accepted Answer

Its strengths are a diversified industrial base, a high urban share and strong human development, supported by welfare programmes. Challenges are the regional imbalance between the industrial north and west and the south, water stress, rising debt and the fiscal cost of subsidies, and reliance on a few export sectors. A reform direction is to spread industry to lagging districts and strengthen own revenue.

Question 8

In which year did Tamil Nadu begin presenting a separate agriculture budget?

Accepted Answer

2021.

Practice — Tamil Nadu's Economy: Industry, Finance and the Welfare Model

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