Rs 13 Lakh Crore Debt Burden On Tamil Nadu: White Paper By TVK Government

Ahead of presenting its first Tamil Nadu Budget, the TVK government on Tuesday released a White Paper on the state's finances, warning that Tamil Nadu is facing what it described as "one disease with six symptoms" and estimating the state's true debt burden at Rs 13.18 lakh crore.

Released by Finance Minister Maria Wilson, the report argues that rising debt, mounting interest payments, record revenue deficits, declining own-tax revenue, high committed expenditure, and hidden liabilities are all manifestations of deeper structural weaknesses in the state's finances. At the same time, the government insisted that the situation is "challenging but not hopeless" and can be corrected without imposing fresh taxes on the public. 

The White Paper estimates Tamil Nadu's direct outstanding debt at Rs 10 lakh crore in 2025-26. However, when liabilities of state public sector undertakings and other contingent liabilities are included, the state's total debt exposure rises to Rs 13.18 lakh crore. Public sector undertakings alone account for debt of over Rs 3.18 lakh crore, while government guarantees have climbed from Rs 65,659 crore in 2021 to Rs 1.79 lakh crore in 2026. 

மாண்புமிகு நிதி, திட்டம் மற்றும் வளர்ச்சித் துறை அமைச்சர் முனைவர் நெ. மரிய வில்சன் அவர்கள் தமிழ்நாட்டின் நிதி மேலாண்மை குறித்த வெள்ளை அறிக்கையினை வெளியிட்டார்

தலைமைச் செயலகம், சென்னை
16-06-2026 pic.twitter.com/JiqBnDqnJm

— Dr N. Marie Wilson (@MarieWilson_TVK) June 16, 2026

Among the biggest contributors is the power sector. The Tamil Nadu Electricity Board group has a debt of Rs 2.47 lakh crore and accumulated losses of Rs 1.82 lakh crore, according to the report. 

The White Paper says Tamil Nadu's revenue deficit has reached a historic high of Rs 78,324 crore, while fiscal deficit stands at Rs 1.33 lakh crore, equivalent to 3.77 per cent of GSDP, exceeding the Fiscal Responsibility Act norm of 3 per cent. 

It further notes that debt has increased by Rs 4.87 lakh crore during the last five years alone, exceeding the amount accumulated during the state's first six decades. The report argues that debt has been growing much faster than capital expenditure, suggesting borrowing was increasingly used to meet day-to-day expenditure rather than create productive assets. 

A major concern highlighted is the rising cost of servicing debt. Interest payments are projected at Rs 67,050 crore in 2025-26, compared to capital expenditure of Rs 50,911 crore. The report notes that Tamil Nadu now spends Rs 1.32 on interest payments for every Rs 1 spent on creating assets. Interest payments alone consume 22.8 per cent of total revenue receipts and nearly 35 per cent of the state's own tax revenue. 

The White Paper also points to a decline in revenue mobilisation. Tamil Nadu's own tax revenue has fallen to 5.45 per cent of GSDP, described as the lowest level on record. It identifies four major areas of revenue leakage and under-performance - GST administration, stamp duty collections due to guideline values lagging market prices, excise revenue and mining revenues. 

The report says Tamil Nadu failed to adequately prepare for the end of GST compensation from the Centre despite knowing it was temporary. It also argues that the growing share of cess and surcharge collections by the Union government has reduced the divisible pool available to states. 

Another concern is the growing rigidity of expenditure. Salaries, pensions and interest payments alone are projected to cost Rs 1.89 lakh crore in 2025-26. Committed expenditure accounts for 64.4 per cent of total revenue receipts, the highest among comparable states, and rises to nearly 87 per cent when statutory subsidies and other mandatory spending are included. 

The report also highlights inefficiencies in state-run enterprises. Tamil Nadu's transport corporations spend Rs 78.81 per kilometre while earning only Rs 25.97 per kilometre, creating a gap of nearly Rs 53 per kilometre.

Looking ahead, the White Paper warns of a major demographic challenge. Tamil Nadu is projected to become one of India's fastest-ageing states, with the elderly population expected to rise from 10.6 per cent in 2011 to 18.2 per cent by 2031, while by 2100, nearly 48 per cent of the population could be elderly, compared to a national average of around 27 per cent. At the same time, the working-age population is expected to shrink, increasing pressure on public finances.

Despite the grim assessment, the TVK government reiterated that welfare schemes and electoral commitments would continue. The White Paper argues that welfare spending is not the core problem and says the government intends to fund its promises through improved revenue mobilisation, plugging leakages, structural reforms and what it calls "clean and honest administration" rather than through fresh taxes.

Finance Secretary MA Siddique stressed that the White Paper should not be viewed as a political exercise. "This is not a blame game against any government or political party. It is a transparent, evidence-based assessment of the current state of Tamil Nadu's finances," he said. 

The report concludes that while the road ahead will be difficult, addressing the root causes of fiscal stress now is critical if Tamil Nadu is to avoid a future debt trap and sustain both welfare spending and economic growth.

DMK responded to the report, calling it a "black paper".