CHENNAI: With the outstanding debt projected at Rs 10.43 lakh crore in 2025-26, Tamil Nadu has retained its position as the country's most indebted State. However, that statistics won’t capture the full picture, as the latest fiscal data also shows the State's economy has expanded at a faster pace.
Its Gross State Domestic Product (GSDP) is estimated to rise to Rs 35.29 lakh crore, making it India's second-largest economy after Maharashtra, while per capita income has also grown faster than the rise in borrowings.
Data tabled in the Rajya Sabha by the Union Finance Ministry shows Tamil Nadu's outstanding debt is estimated at Rs 10,42,858 crore in 2025-26 (Budget Estimates), making it the only State to cross the Rs 10-lakh crore mark. Maharashtra follows with Rs 9,37,160 crore, Uttar Pradesh with Rs 8,83,977 crore, Karnataka with Rs 8,14,278 crore, and West Bengal with Rs 7,90,238 crore.
The numbers, however, also point to sustained economic expansion. Tamil Nadu's GSDP is estimated to increase from Rs 26.89 lakh crore in 2023-24 to Rs 31.19 lakh crore in 2024-25 and further to Rs 35.29 lakh crore in 2025-26, registering a cumulative growth of about 31.2% over two years.
Per capita income has also recorded strong growth, rising from Rs 3,13,329 in 2023-24 to Rs 3,61,619 in 2024-25 and is projected to reach Rs 4,08,027 in 2025-26, an increase of about 30.2%.
In comparison, the State's outstanding debt has risen from Rs 8,43,532 crore in 2024 to Rs 9,38,358 crore in 2025 and is projected to touch Rs 10,42,858 crore in 2025-26, reflecting a cumulative increase of about 23.6%. The gap indicates that the State's economy and income levels have expanded at a faster rate than its debt burden over the period.
The figures, based on the Reserve Bank of India's ‘State Finances: A Study of Budgets 2025-26’, were furnished by Union Minister of State for Finance Pankaj Chaudhary in a written reply to the Rajya Sabha.
Tamil Nadu remains India's second-largest State economy with a projected GSDP of Rs 35.29 lakh crore, behind Maharashtra's Rs 51 lakh crore. Karnataka is estimated at Rs 32.81 lakh crore, followed by Uttar Pradesh at Rs 30.25 lakh crore, and Gujarat at Rs 29.84 lakh crore.
The state also ranks among the country's leaders in per capita income. Among major states, Tamil Nadu's projected per capita income of Rs 4,08,027 is behind Karnataka's Rs 4,33,326 and Telangana's Rs 4,18,931, underscoring its position as one of India's high-income State economies even as it carries the largest outstanding debt.