Tamil Nadu, which has earned a reputation as a fast-growing state, recorded 15.98% GSDP (Gross State Domestic Product) growth in 2024-25. But do the state’s finances reflect this growth at the same pace? The answer is ‘no,’ according to the Comptroller and Auditor General’s (CAG) report and recent GST collection data.
After the T.V.K. government’s white paper said that the ‘coffers are empty,’ the Tamil Nadu government also formed a special committee to identify and implement different sources of revenue.
In this context, in a report released by the Comptroller and Auditor General (CAG) last Tuesday, it stated that Tamil Nadu’s debt-to-GSDP ratio is 27.38%. The report also pointed out that this is within the limit set by the Finance Commission. At the same time, the Comptroller and Auditor General has issued an important warning as well. Although the state’s GSDP growth is 15.98%, revenue growth is only 6.89%. It said that if this situation continues, the fiscal deficit will increase.
Tamil Nadu is also facing another major problem. Over the past few months, Tamil Nadu’s GST revenue has been declining. In August 2026, Tamil Nadu’s GST collection was Rs. 10,189 crore. In August 2025, it was Rs. 10,329 crore. However, during the same period, the country’s overall GST collection increased by 9%. At the state level, Karnataka saw a 13% growth in GST collections, Gujarat 15%, and Telangana 16%. If Tamil Nadu’s GST collections are falling, it means there is a slowdown in economic activity.
Some economists say that the changes brought about by the new government’s reform measures may also be a reason for the decline in GST collections. Reform measures against corruption and irregularities are indeed necessary. But constructive steps must be taken quickly to accelerate reforms and promote growth.
Since GST plays a major role in the state’s tax revenue, if its decline continues, the financial situation will worsen further. If revenue dries up, debt will increase even more. Already, only about one-third of the government’s debt is capital expenditure. More than 70 percent of the debt is being used for expenses that do not help revenue growth.
It cannot be ignored that Tamil Nadu is falling behind while competing states move ahead. The Chief Minister must pay serious attention to this issue.
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