The TVK government’s white paper puts Tamil Nadu’s debt at ₹13.18 crore
Tamil Nadu’s actual outstanding debt stands at ₹ 13.18 crore, including the combined debt of public sector undertakings (PSUs), according to a White Paper released by Finance Minister N. Marie Wilson on Tuesday (June 16, 2026).
He released the White Paper on Fiscal Management of Tamil Nadu – An Examination of Public Finances 2021-22 to 2025-26 at the Secretariat. After assuming office last month, Chief Minister C. Joseph Vijay said his government would issue a White Paper on public finances.
According to the report, the total debt of ₹10 crore in 2025-26 captures only direct borrowing of the state through market borrowing, institutional debt and public account liabilities. It does not capture loans from users of payment services, statutory bodies and special-purpose companies guaranteed or implicitly supported by the state.
The biggest source of debt
The power sector remains the single largest source of debt among PSUs, accounting for ₹ 2.47 crore. Among its entities, Tamil Nadu Power Distribution Corporation (TNPDCL) (formerly TANGEDCO/TNEB) has an outstanding debt of ₹ 1.07 crore, while Tamil Nadu Power Generation Corporation (TNPGCL) has a debt of ₹ 1.03 crore. Tamil Nadu Transmission Corporation (TANTRANSCO) has a debt of ₹30,965 crore and Tamil Nadu Green Energy Corporation has a debt of ₹5,672 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. The total outstanding debt of these PSUs is 3.18 lakh crores.
The report also compared Tamil Nadu’s key fiscal indicators with those of peer states such as Karnataka, Maharashtra and Gujarat, which generally share comparable levels of per capita income, diversified industrial structures, significant urban populations and historically similar starting fiscal positions.
The report states that the state’s outstanding debt has almost doubled in the five years from 1 April 2021, rising from ₹ 5.13 crore to nearly ₹ 10 crore as of 31 March 2026. “The debt-to-GSDP ratio has remained elevated throughout the post-Covid period, reaching a solid 263% from the peak in the COVID era achieved by other peer nations,” it said.
Interest exceeds capital expenditure
Interest payments consume approximately 23% of total revenue and nearly 35% of State Owned Tax Revenue (SOTR). At ₹ 67,050 crore in 2025-26, the annual interest bill exceeds the annual capital expenditure by about one-third, the report said.
The report pointed out that the revenue shortfall has become structural. Preliminary reports for 2025–2026 project a revenue deficit of ₹78,324 crore, equivalent to 2.2% of GDP, the highest on record in absolute terms and even exceeding the level of the COVID year. The government borrows to finance current consumption rather than investment, the report says.
The SOTR to GSDP ratio fell from 5.93% in 2021-22 to 5.45% in 2025-26, the lowest level in the last two decades and the steepest decline among peers during the post-COVID period.
Fixed expenses, including salaries, pensions and interest payments, are among the highest compared to similar states. It increased from ₹1.25 million to ₹1.89 million, increasing its revenue share from around 60% to 64%, well above the sub-50% level maintained by other peer states. This eroded the fiscal space available for capital expenditure and investment. The report highlighted that the ratio of capital expenditure to total expenditure at 11.8% is the lowest among the same states.
The Minister pointed out that the Tamil Nadu Fiscal Responsibility Act, 2003 has been amended eight times so far to delay the achievement of zero revenue deficit and to limit the fiscal deficit to 3%.
A growing elderly population
The report also highlighted the growing elderly population, which is projected to account for 18.2% of the state’s total population by 2031. Tamil Nadu will have the highest proportion of elderly among major states by 2031, according to population projections by the Union Ministry of Health and Welfare.
He also highlighted the declining working-age population, rising dependency rates and their consequences, including a shrinking tax base and increasing social security obligations. The report noted that while peer states either improved or stabilized their fiscal positions during the analysis period, Tamil Nadu’s fiscal position deteriorated across all major indicators and the coming year offered little immediate relief.
The Minister said that remedying this situation will require sustained efforts in revenue mobilisation, expenditure management, PSU reform and debt management beyond one budget cycle.
System leaks
Mr Wilson said the new government would focus on repairing revenue losses due to systemic leakages and administrative deterioration in business taxes, stamp duty and registration, excise duty and mining. He said that by closing leakages in these areas, the government could mobilize additional revenue of nearly ₹20,000 crore this financial year. He said the government would initiate structural reforms in PSUs to improve their efficiency.
Published – 16 Jun 2026 19:46 IST