Tamil Nadu’s economy expands 39% in five years, ranks among India’s fastest-growing major states: RBI

CHENNAI: Tamil Nadu recorded a 39 per cent rise in Gross State Domestic Product (GSDP) between FY2020 and FY2025, emerging as one of the fastest-growing major state economies in the country, according to the Reserve Bank of India’s Handbook of Statistics on Indian States 2024–25.

The RBI’s updated state domestic product series, released in December 2025, shows that only Assam posted a higher five-year expansion at 45 per cent. Tamil Nadu’s 39 per cent growth placed it ahead of Karnataka (36 per cent), Uttar Pradesh (35 per cent), Rajasthan (34 per cent), Bihar and Andhra Pradesh (33 per cent each), Chhattisgarh and Jharkhand (31 per cent each), and Telangana (30 per cent).

The five-year period covers the pandemic-affected FY2020 and the subsequent recovery phase through FY2025. The data indicate that Tamil Nadu sustained momentum despite the economic disruption during the early part of the cycle.

The handbook’s state domestic product tables show that Tamil Nadu remains one of India’s largest sub-national economies, with steady increases in output at current prices across successive years up to FY2024–25. The expansion reflects broad-based contributions rather than sector-specific spikes.

Sector-wise Gross State Value Added data compiled by the RBI point to manufacturing as a key driver. Tamil Nadu continues to register substantial value addition from factory-based production, supported by diversified industrial clusters. The handbook’s industry indicators also show consistent levels of invested capital, fixed capital and gross value added in the factory sector over recent years, signalling sustained industrial activity.

The services sector has remained another major contributor. The RBI’s value added figures reflect steady growth in financial services, trade, real estate, transport and other services, reinforcing the state’s strong urban and commercial base.

Infrastructure indicators support this trajectory. The handbook records steady increases in installed power capacity and electricity availability across years, ensuring reliable supply for industrial and commercial demand. Road length, renewable power capacity and related infrastructure metrics show continued expansion, aligning with the needs of a production-oriented economy.

Banking data compiled by the RBI place Tamil Nadu among the leading states in terms of deposits mobilised and credit deployed by scheduled commercial banks, reflecting financial depth and economic activity.

On the fiscal front, the handbook’s state-level indicators show sustained capital expenditure alongside revenue spending, suggesting continued public investment in infrastructure and social sectors.

Per capita Net State Domestic Product data further indicate that Tamil Nadu remains among the higher-income states, pointing to relatively strong income levels in addition to aggregate expansion.

While Assam’s 45 per cent rise marks the highest percentage growth over the five-year period, Tamil Nadu’s 39 per cent increase stands out given the scale of its economy. The data underscore the state’s diversified economic structure, combining industrial output, services expansion, infrastructure support and financial depth.

The RBI handbook positions state-level economic performance as central to understanding India’s growth trajectory, with Tamil Nadu continuing to feature prominently among the country’s principal growth centres.

Tamil Nadu – Five-Year Economic Expansion

(FY2020–FY2025 | RBI – Handbook of Statistics on Indian States 2024–25)

GSDP Growth (Five Years):

• Assam – 45%

• Tamil Nadu – 39%

• Karnataka – 36%

• Uttar Pradesh – 35%

• Rajasthan – 34%

• Bihar – 33%

• Andhra Pradesh – 33%

• Chhattisgarh – 31%

• Jharkhand – 31%

• Telangana – 30%

Structural Drivers – Tamil Nadu

Industrial Strength:

• Significant value addition from manufacturing and factory output

• Steady invested and fixed capital growth in industry

Services Expansion:

Sustained rise in financial services, trade, real estate and transport value added

Infrastructure Backbone:

• Consistent increase in installed power capacity and electricity availability

• Expansion in roads and renewable energy capacity

Financial Depth:

Among leading states in bank deposits and credit deployment

Income Indicator:

Higher-tier per capita Net State Domestic Product among Indian states

Source: Reserve Bank of India, Handbook of Statistics on Indian States 2024–25.