Tamil Nadu News

TN government’s White Paper 2026

June 19 , 2026 100 days 3674 0

The State Govt released the White Paper on the Fiscal Management of Tamil Nadu: An Examination of Public Finances 2021-22 to 2025-26.
It puts Tamil Nadu’s debt at ₹13.18 lakh crore, including the combined debt of public sector undertakings (PSUs).
It says the headline debt figure of ₹10 lakh crore in 2025-26 captures only the State’s direct borrowings through market loans, institutional debt, and public account liabilities; it does not capture the borrowings of the PSUs, statutory boards, and special purpose vehicles that the State guarantees or implicitly supports.
The power sector remains the single largest source of debt among the PSUs, accounting for ₹2.47 lakh crore.
The outstanding debt of eight government transport undertakings stands at ₹43,865 crore, while that of the Tamil Nadu Civil Supplies Corporation is ₹27,181 crore, the report said.
Together, the outstanding debt of these PSUs stands at 3.18 lakh crore.
The report said the State’s outstanding debt had almost doubled in the five years since April 1, 2021, rising from ₹5.13 lakh crore to nearly ₹10 lakh crore as of March 31, 2026. The debt-to-GSDP ratio has remained elevated throughout the post-COVID period and stood at 28.3% in 2025-26.
Interest payments consume approximately 23% of the total revenue receipts and nearly 35% of the State’s Own Tax Revenue (SOTR).
At ₹67,050 crore in 2025-26, the annual interest bill exceeds the annual capital expenditure by approximately one-third.
The 2025-26 pre-actuals projects a revenue deficit of ₹78,324 crore, equivalent to 2.2% of the GSDP, the highest recorded in absolute terms and even exceeding the COVID year level.
The State is borrowing to fund current consumption rather than investment.
More than one-third of every rupee the State raises through its own taxation effort goes directly to servicing past debt.
The White Paper said mining revenue was among the “most striking examples of stagnation” in the non-tax income of Tamil Nadu.
The State had “substantial deposits” of granite, limestone, sand, quartz, vermiculite, and a range of other minor minerals.
Royalties, rents, and seigniorage fees on minor minerals contributed to mining revenue.
The SOTR-to-GSDP ratio has declined from 5.93% in 2021-22 to 5.45% in 2025-26. Committed expenditure, including salaries, pensions, and interest payments, is among the highest, compared with the peer States (Maharashtra, Gujarat, and Karnataka).
It rose from ₹1.25 lakh crore to ₹1.89 lakh crore, increasing its share of revenue receipts from about 60% to 64%.
At 11.8%, the capital expenditure-to-total expenditure ratio is the lowest among the peer States.
Tamil Nadu Fiscal Responsibility Act, 2003, has been amended eight times so far to defer achieving a zero-revenue deficit and limiting the fiscal deficit to 3%.
The report also highlighted the growing elderly population, which is projected to account for 18.2% of the State’s total population by 2031.
According to the Union Ministry of Health and Family Welfare’s population projections, Tamil Nadu will have the highest proportion of elderly people among the major States by 2031.
It refers to Tamil Nadu having the second largest GSDP size (next to Maharashtra) with a diversified industrial and services economy, apart from a large formal-sector tax base.

The State’s Own Tax Revenue (SOTR) constitutes about two-thirds of the total revenue receipts (TRR).
The State’s “own-tax revenue is drawn from five principal sources”.
It pertained to commercial taxes (Goods and Services Tax), Value Added Tax (VAT) on petroleum, State Excise and VAT on liquor, Stamps & Registration, Motor Vehicle Tax, and other taxes.
Within the broader commercial taxes, GST accounted for around 53%; VAT on liquor, 28%; and VAT on petroleum products, 19%.
The trend of growth in Tamil Nadu’s consumption of diesel and petrol is well below the real GSDP [Gross State Domestic Product] growth rate of around 7% per annum in the last 10 years.
Tamil Nadu’s consumption of petrol and diesel was reaching a point of stagnation.
The document attributed the development to improving fuel efficiency, the growing adoption of Compressed Natural Gas (CNG) and electric vehicles, and the shift of freight traffic patterns.