CHENNAI: Tamil Nadu Finance Minister Marie Wilson on Tuesday released a white paper on the state's finances, targeting the previous DMK regime over a range of metrics and asserted that the state's debt burden now stood at a whopping Rs 10 lakh crore.
Addressing a press conference at the Secretariat, Wilson released the white paper, which featured six principal findings and said the stock of outstanding liabilities rose from Rs 5.13 lakh crore on 1 April 2021 to approximately Rs 10 lakh crore by 31 March 2026, growing at a CAGR of 14.3 per cent — faster than nominal GSDP in most years of the window.
The minister said that the "true" debt burden of the state --by including borrowings of public sector undertakings-- is Rs 13.18 lakh crore.
The key findings were outstanding debt has almost doubled in five years, interest payments now crowd out investment, the revenue deficit has become structural, the State’s own-tax effort has collapsed, committed expenditure has squeezed out development and contingent liabilities take the true debt position far higher.
Assuring a clean, corruption-free government and promising revenue mobilisation and administrative efficiency, the minister said the current precarious situation will be addressed by plugging leakages.
In an official release, the government said: "The white paper's focus is the five-year post-COVID window from 2021-22 to 2025-26 — the period during which the post-pandemic recovery created the conditions for fiscal consolidation, during which Tamil Nadu’s traditional peers (Karnataka, Maharashtra and Gujarat) used those conditions to restore their fiscal positions, and during which the State’s own indicators moved in the opposite direction.
The white paper presents a transparent, evidence-based account of Tamil Nadu’s public finances. "It is neither an exercise in retrospective blame nor a political manifesto, but an analytical statement of fiscal fact."
The government said that the debt-to-GSDP ratio has stayed elevated throughout, at 28.3 per cent in 2025-26 with no material consolidation from the COVID peak.
"Per-capita liability has risen to Rs 1,28,934 — far higher than the peer-group States. While peer States used the recovery to reduce their Debt-to-GSDP ratio, Tamil Nadu did not."
As regards key metrics of SOTR (State's Own Tax Revenue) and GSDP (Gross State Domestic Product), it stood at 5.45 per cent, which was pretty low.
Committed expenditure of interest payments, salaries, and pension alone constitute 64.4 per cent of the revenue.
The annual interest bill grew from Rs 41,564 crore in 2021-22 to Rs 67,050 crore in 2025-26 (Pre-Actuals), a 61 per cent increase.
Interest now consumes approximately 22.8 per cent of total revenue receipts and over 34.8 per cent of the State’s own-tax revenue — nearly one rupee in every four of revenue, committed before any allocation decision is made.
While the peer states maintain an Interest Payments / Total Revenue Receipts at a lower level, Tamil Nadu’s interest burden is highest among the peers, close to two times that of Gujarat and Maharashtra.
The interest payments to capital expenditure ratio in 2025-26 now stood at about 1.32 to 1. The state now spends more servicing past borrowings than building assets for the future.
The revenue deficit has become structural, the government said and noted that the 2025-26 (Pre-actuals) revenue deficit of Rs 78,324 crore (2.22 per cent of GSDP) is the highest the state has ever recorded, exceeding even the COVID-affected year of 2020-21 in absolute terms.
In 2025-26, Tamil Nadu’s revenue deficit was roughly 2.5 times that of Karnataka or Maharashtra, while Gujarat ran a surplus, leaving Tamil Nadu with a very high revenue deficit.
Underlining that the state’s own-tax effort has collapsed, the white paper said the total Revenue Receipts fell from about 10 per cent of GSDP in 2021-22 to 8.32 per cent in 2025-26, and the SoTR-to-GSDP ratio declined from 5.93 per cent to 5.45 per cent — the lowest in the State’s history and the steepest decline among the benchmarked States.
While the peer States have improved upon their tax effort, Tamil Nadu did not. Measured against the 2022-23 peak of 6.33 per cent, this represents roughly Rs 51,000 crore of revenue foregone in the last three years.
The decline is spread across all major tax heads — GST, petroleum VAT, state excise, stamp duty and motor vehicle tax; and it is policy- and administration-driven.
Leakages and systemic corruption in revenue-collecting departments is responsible for the dismal scenario, rather than structural economic disadvantage, the white paper said.
Committed expenditure — salaries, pensions and interest — rose from Rs 1.25 lakh crore to Rs 1.89 lakh crore, lifting its share of revenue receipts from about 60 per cent to 64 per cent, well above the under-50 per cent maintained by the peer group.
Once statutory and other inflexible obligations are added, roughly 87 per cent of revenue receipts are pre-committed before the annual budget exercise begins.
Thus, capital expenditure has been the casualty and at 11.8 per cent of total expenditure, it is the lowest among the three benchmarked States, foreclosing fiscal space for new schemes, counter-cyclical response and the investment needed to attract private capital.
Soon after taking over as the chief minister, TVK founder leader C Joseph Vijay had assured that his government would release a white paper on the state finances.