Is Chennai emerging as the Indian economic tiger?

There is every reason to believe that the economy of Chennai, and indeed Tamil Nadu, will continue to accelerate in future to emerge as the Indian economic tiger. Consider this: Massive investments are coming into the manufacturing sector in the state spanning automotive, electronic hardware, R&D and so on. BMW will go onstream not long from now, Hyundai is expanding capacities, Ford is expanding their product line, Komatsu is setting up a manufacturing plant for their heavy earth movers; and , of course Mahindra-Nissan-Renault will contribute Rs 4000 crores to the state GDP when fully operational, while the ancillaries will contribute another Rs2200 crores. Add to this large projects like Motorola (Rs 135 crores), Apollo Radial (Rs 520 crores), Caparo (Rs 300 crores) and Tessolve (Rs 1000 crores). The latest hardware manufacturer to announce their choice of Tamil Nadu is Dell who evaluated 70 parameters before arriving at their decision.

In his opening speech at yesterday’s Indo-US Economic Summit organized by the CII and the US India Business Council, US Chambers of Commerce International Affairs Senior Vice President Dan Christman said, “The state has witnessed a miracle through reforms, and by giving an impetus to private enterprise. It is a manufacturing miracle seen across all sectors. A look at the capabilities clearly indicates that it is the gateway to South East Asia”. Mind you, this is without adding on services, leave alone the IT sector’s growth in the state. A Harvard Business School study has indicated that Chennai will grow faster than Bangalore as an IT centre given its inherent advantages. The IT Corridor will see the creation of 300,000 new jobs in the near future. Infosys has created the world’s largest off shore development centre at Mahindra City near Chennai with a final capacity of 25000 developers. TCS is creating their largest India base here in Chennai for 8000 developers, outstripping their Mumbai centre which has 6000 developers.

The government is working hard to ensure that development is spread across the state in cities and towns like Coimbatore, Trichy and Madurai, not only for IT parks but also for manufacturing. Now the government has set in process the establishment of a State Wide Area Network (SWAN under the National eGovernance Programme) to take connectivity to the Taluk level in two months. State IT Secretary Dr C Chandramouli has stated that 5000 service centres with sufficient bandwidth would be set up in rural areas to enable outsourcing of low value IT jobs to rural youth, both men and women. Add to this the focus on primary education, technical education and colleges in rural areas, and the supply of educated, trained young people in a sustained manner for the state’s economy looks possible. As it is there are some 250 engineering colleges in Tamil Nadu who graduate up to 80,000 engineers every year, the highest of any state in India. This is one of the reasons why the state is fast becoming a favoured destination for IT and ITES companies.

All this will mean socio-economic development and growth over the next ten to fifteen years, so that median incomes and the quality of life of the average citizen improve consistently. What it also means is that there will be sustained pressure on the state’s, and the cities,-particularly Chennai’s, infrastructure to cope with rapid growth. This will be on electricity generation, roads & highways, the port, airports, rail infrastructure, sewerage & water supply and other civic amenities. Chennai and other cities should not be allowed to become like Mumbai, which is choking on itself, or Bangalore where the quality of life is not what it used to be. While there are many plans such as the new airport or expansion of the airport, the Chennai Master Development Plan incorporating the outlying areas that are fast becoming urbanized, the second container port, the metro rail corridors at an investment of over Rs 9000 crores, grade separators, by pass roads and so on, the ability to execute these projects in a professional and timely manner is questionable.

Take the IT Corridor as an example. Four years after it was announced, it is finally being accelerated by the present state government. The previous government sat on the file after announcing it for over two years until public pressure forced them to start work. The elevated railway from the Beach Station to Velachery is still to be completed. Many projects are started and then languish with a change in government- one remembers how the Cooum was cleaned up and landscaped by the DMK government, following which the MGR government allowed it to deteriorate and become a mess. The Veeranam pipeline is another case in point. Of course, Chennai’s water supply is a problem which no government has seriously addressed when the solution could be as obvious as deepening the Red Hills and Chembarambakkam lakes instead of allowing millions of litres of precious fresh water into the sea as floods every monsoon. Chennai and the state just cannot afford to have political parties that ignore the positive contribution made by previous governments any longer. They need the political maturity to view what is best for the growth of the state and the city as of paramount importance. Indeed their survival as a government in future will depend on it.

With Rs 18,000 crores allocated for Chennai’s infrastructure over five years, what is going to determine if this government is successful is not just its ability to attract investments.Its ability to make a real difference to the quality of life of the citizens of Chennai and the state will be determined by how well they are able to execute the much needed infrastructure to enable economic growth. For without the accelerated development of infrastructure, we will not be able to sustain growth to emerge as an Indian economic tiger. But there is hope: This is the state government that was able to execute the Tidel Park project from open ground to one of the first, sophisticated ‘plug & play’ parks in Chennai in just 18 months. That was a public-private partnership, and continues to be a successful model on which many other projects can be based. Lets hope for the best, and encourage, co-operate and work with the government in every way to make this possible.

15 Comments so far

  1. kokki_kumar (unregistered) on March 10th, 2007 @ 11:23 am

    are u a dmk sympathizer?? illa avungalikku pracharam seiya indha article-a?

  2. Vijay (unregistered) on March 10th, 2007 @ 4:51 pm

    There are many mistakes in the article.

    1) It’s not $4 Billion, Rs. 4000/- Crores is correct
    2) $2.2 Billion is wrong. It could be Rs. 2,200 Crores
    3) Not 25 Engineering Colleges. It is around 250 Engineering college, produces 80,000 Engineers annually.

  3. david (unregistered) on March 10th, 2007 @ 6:37 pm

    Thanks Vijay. I think its Rs 4 billion and Rs 2.2 billion, not dollars. That would correspond to Rs 4000 crores and Rs 2200 crores if I’m not wrong! Yes, it is 250 engineering colleges not 25. Thanks again!


  4. Bflychaser (unregistered) on March 10th, 2007 @ 6:51 pm

    Nice article David. Well written. More please.

  5. Anand (unregistered) on March 11th, 2007 @ 6:37 am

    Thanks for compiling such a wonderful article….

    Hope this becomes a dream for all politicians and industrialists and the dream comes true one day, and I wish it happens at least in our lifetime to see and enjoy.

  6. pong (unregistered) on March 11th, 2007 @ 10:51 am

    Are you guys done messing around with crores and billions yet? For some of you who have trouble converting, 1 billion = 100 crore = 1000 million. Please fix any fuzzy numbers you may have.

  7. anonymous coward (unregistered) on March 12th, 2007 @ 3:16 pm

    Why is david blogging here. He knows very little about chennai, get his facts wrong. He even doesn’t know math, why is he blogging at all.
    David should belong to DMK b’cos Thayanithi Maran said India has a population of 1000 crores (actually was trying to say 1 billion in crores).
    Wonder why Nilu hasn’t puked here yet.

  8. Yuva (unregistered) on March 12th, 2007 @ 7:05 pm

    hope so.. but in recently year one would notice disparity between rich/middle-class and poor is very wide. hope such initiatives will reach people who are in needs.

    as i read the today’s facts :
    – 2001, 71% population lived in rural India. While in 2026 it will become 68%.
    – Only 24% rural houses are having roof of concrete, brick or stone.
    – Only 26 rural houses have stone. Concrete or pucca floors, rest mud floors
    – Only 7% rural houses have WC latrine, 15% pit or other latrine and rest 78% no latrine
    – Only 5.7% rural houses have LPG as fuel.
    – Only 43% rural houses have electricity as lighting means.
    – Only 24% rural houses have tap water supply, 43% hand pump sourced, 22% from well
    – and TN is water problem. fight with neighboring state over water/river sharing.

    so much of it matters ONLY if rural development is also planned and executed.


  9. vinod (unregistered) on March 12th, 2007 @ 9:54 pm

    hey david,

    brilliant article… i am always proud of being a chennaiate…this just reinforces that..

  10. suppamani (unregistered) on March 13th, 2007 @ 11:06 am

    Though this is not related to this,pardon me for putting the same here; I dont know why ALL the comments published in ‘tHE TAMILNBADU tHE tEMPLE lAND HAS BEEN WITHDRWN AND NO MORE COMMENTS ARE ALSO ALLOWED?

  11. Yuva (unregistered) on March 14th, 2007 @ 12:36 pm

    btw– i remember posting comment here.. is it me or system at fault!!?

  12. Yuva (unregistered) on March 14th, 2007 @ 12:37 pm

    sorry ignore previous message.. i can notice now.
    thanks and sorry again.

  13. Govar (unregistered) on March 15th, 2007 @ 8:20 am
  14. gokul (unregistered) on March 17th, 2007 @ 8:57 am

    @ kokki-kumar and vijay…..the article did in fact state the facts right….i have seen a copy of the MOU and it states that there would be an over all addition of 4-4.5 billion dollars( 16000-18000 crores) to the state’s gdp every year once the plant is fully function…..and the expected additional investments by ancillary units are expected to be about 10,000 crores…for verification check out the government of tamil nadu site for the official GoV-TN press release…

    here’s the link…

  15. david appasamy (unregistered) on March 19th, 2007 @ 4:24 pm

    Thanks Gokul. I am travelling overseas since the day I did that post with little access to the Net. So its been difficult to do diligence etc. Thanks for doing that and pointing out that it was indeed originally correct. And Govar, thanks for highighting that article. Its a great feeling to know Chennai is the most livable city with the best quality of life in India. But then we always knew that didnt we? :-)

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