Acknowledgement We are thankful to the UNDP and the Indira Gandhi Institute of Development Research (IGIDR) for entrusting this study to the Madras School of Economics. We have considerably benefited from discussions with Dr. Shovan Ray of the IGIDR, Dr. Seeta Prabhu, and Dr. Suraj Kumar of the UNDP, and participants from other states in the initial rounds of discussion for this project. During the course of the study we had occasion to discuss various aspects of the study with a number of senior officials of the Government of Tamil Nadu (GoTN). On the basis of the draft report we also made a presentation to the Government of Tamil Nadu in a meeting presided over by the Chief Secretary Mr. K. S. Sripathi, IAS. Various departments were represented in this meeting and based on their feedback the report has now been finalised. In particular, we would like to thank Dr. K. Arulmozhi, Principal Secretary, GoTN and Member Secretary, State Planning Commission and Mr. R. Vijaykumar, Principal Secretary GoTN, Planning, Development and Special Initiatives Department. Mr. Praveen Kumar, Special Secretary to GoTN, Department of Finance, provided useful inputs reflecting the fiscal concerns. Many of the relevant departments also provided useful inputs. In particular, we are thankful to Mr. Ramamohana Rao, Principal Secretary GoTN, Social Welfare and Noon Meal Programme Department, Ms. Apoorva, Special Secretary GoTN, Health and Family Welfare Department, Mr. Gagandeep Singh Bedi, Commissioner of Rural Development and Panchayat Raj Department, Mr. S. Sundararajan, additional Secretary GoTN, School Education Department, and Dr. M. Murugan, Additional Director Department of Economics and Statistics. We are also thankful to officials from the State Planning Commission. We would like to thank Mr. T.S. Rajasekar, Head of Division, State Planning Commission and Ms. G.N. Krupa, State Planning Commission. We also received research assistance from Aparna Sheshadri, Hanna Pushpa. P, Gajalakshmi, G., Iswaya. B., Andal, B., Merin Varghese, and Monisha Michael. In the preparation of the manuscript we have been helped considerably by Ms Sudha and Ms Jothi at the Madras School of Economics. We are thankful to all of them for their help at various stages in the completion of this study.
CONTENTS Acknowledgements Contents Executive Summary Chapter 1 Issues and Initial Conditions 1 1.1 Introduction 1.2 Millennium Development Goals 1.3 Poverty in Tamil Nadu 1.4 Current Status of Millennium Development Goals: Tamil Nadu 1.5 Summary Chapter 2 Reducing Poverty: The Macro Economic Drivers 17 2.1 Growth and Poverty Reduction: Some Lessons from the Literature 2.2 Tamil Nadu: Growth and Structural Changes 2.3 Growth and Poverty Reduction in Indian States: Some Empirical Results 2.4 Inflation and the Incidence of Poverty 2.5 Challenges of the Changing Demographic Profile 2.6 Summary Chapter 3 Fiscal Reforms for Poverty Alleviation 48 3.1 Fiscal Policies and MDGs: Some Basic Considerations 3.2 State Finance of Tamil Nadu: An Overview 3.3 Fiscal Restructuring for MDGs Based Poverty Reduction 3.4. Medium Term Fiscal Reforms for MDGs Based Poverty Reduction 3.5 Suggested Fiscal Restructuring 3.6 Other Fiscal Reforms: From VAT to GST 3.7 Monitoring Process of Reforms and Mid-course Corrections 3.8 Summary Chapter 4 Coping with Spatial Imbalances 69 4.1 District Level Inequalities: Human Development Index 4.2 Gender Related Deficiencies: District-wise Profile 4.3 Selected Demographic Characteristics of Districts 4.4 Health Services 4.5 Safe Drinking Water 4.6 Incidence of Poverty: District Profile 4.7 Implementation of NREGA 4.8 Intra-district Imbalances: Selected Districts 4.9 Summary i