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Tamil Nadu’s 2025‑26 Economic Survey Highlights Manufacturing Boom, Green‑Hydrogen Hub, and Modest Finance‑Commission Share Rise

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Record‑Breaking Real GSDP Growth Fuels State’s Economic Lead Tamil Nadu posted an 11.19% real GSDP increase in 2024‑25, the fastest among Indian states, while the overall GSDP rose 8.63% and headline CPI fell to 2.45% in 2025‑26 [1]. The secondary sector expanded 13.43%, driven by a 14.74% surge in manufacturing that outpaced the all‑India average of 4.5% [1]. This performance cemented the state’s position as the second‑largest economy in the country.

Exports Double and Manufacturing Jobs Reach National High Merchandise exports climbed from $26.15 bn in 2020‑21 to $52.07 bn in 2024‑25, reflecting stronger global competitiveness in automobiles, auto components, and electronics [1]. Tamil Nadu now supplies 15% of India’s manufacturing employment, the highest state share, thanks to large‑scale, high‑productivity units and skilled labour pools [1]. The Business Reforms Action Plan (BRAP 2024) introduced single‑window clearances and digitised approvals, accelerating project execution [1].

Green‑Hydrogen Hub and Urban Governance Earn Praise V.O. Chidambaranar Port was designated a national green‑hydrogen hub, aligning the state with India’s target of five million tonnes of green hydrogen by 2030 [1]. The Pollution Control Board expanded common effluent treatment plants for tanneries and textile clusters, supporting environmental compliance [1]. Chennai’s Metropolitan Area Parking Policy 2025 and the India Today Gross Domestic Behaviour Survey highlighted disciplined urban management and civic behaviour [1].

Finance‑Commission Share Grows Slightly Amid Southern Gains Under the 16th Finance Commission, Tamil Nadu’s share rose to 4.097% from 4.079%, a marginal 0.44% increase [2]. Karnataka and Kerala saw double‑digit share gains (13.27% and 23.74% respectively), while weight adjustments for area, demographics, and per‑capita GSDP limited Tamil Nadu’s benefit [2]. The state recorded the highest absolute subsidy in 2023‑24 at ₹78,453 crore, though per‑GSDP ratios suggest a heavier relative burden [2].

Sources

Timeline

Post‑2015 – A veteran policymaker cites Tamil Nadu’s ₹100 crore post‑2015 flood project‑preparation fund as a model for disaster‑response financing, noting current schemes only cover relief and temporary works [1].

2020‑21 – Tamil Nadu’s merchandise exports total $26.15 bn, establishing a baseline that later nearly doubles by 2024‑25 [2][4].

2021‑22 – The state’s installed power capacity reaches 35,139 MW and the four‑year average manufacturing growth begins, later recorded at 9.38 % through 2024‑25 [4].

2022‑23 – Multidimensional poverty falls to 1.43 % and higher‑education gross enrolment ratio climbs to 47 %, the highest in India, reflecting broad social development [4].

2023‑24 – Tamil Nadu records the highest absolute central subsidy of ₹78,453 crore, outpacing Karnataka, Andhra Pradesh and Telangana, while its GSDP rises to ₹26.88 lakh crore and per‑capita GSDP hits ₹3.53 lakh, more than three times Uttar Pradesh’s level [1][4][3].

2023‑24 – Construction output expands 15.93 % and the state’s debt‑to‑GSDP ratio stands at 26.6 %, a modest decline from pandemic peaks, indicating manageable fiscal pressure [4][3].

2024‑25 – Real GSDP grows 11.2 % (11.19 % per Economic Survey), the fastest among major states, with the secondary sector up 13.43 % and manufacturing surging 14.74 %, three times the all‑India average [2][4].

2024‑25 – Manufacturing employment reaches 24.75 lakh workers across 40,121 factories, giving Tamil Nadu 15 % of India’s manufacturing jobs, the largest state share [2][4].

2024‑25 – Merchandise exports double to $52.07 bn, driven by electronics, automobiles, textiles and engineering, cementing the state’s export leadership [2][4].

2024‑25 – Installed power capacity climbs to 42,772 MW, supporting industrial expansion and renewable‑energy projects [4].

2024‑25 – Capital investment plans for 2025‑26 target a 22 % increase, focusing on transport, urban development and energy, including the Tamil Nadu Semiconductor Mission and fintech hubs [3][4].

2024‑25 – The V.O. Chidambaranar Port is designated a national green‑hydrogen hub under the National Green Hydrogen Mission, aligning the state with India’s goal of five million tonnes of green hydrogen by 2030 [2].

2024‑25 – The Business Reforms Action Plan (BRAP 2024) launches single‑window clearances, digitised approvals and land‑reform measures, accelerating project execution and promoting solar parks and district‑level decarbonisation [2].

2025‑26 – Tamil Nadu’s debt‑to‑GSDP ratio falls to 26.1 %, interest payments consume 21 % of revenue receipts, and the fiscal deficit is projected at 3 % of GSDP, staying within the FRBM limit [3].

2025‑26 – The state’s capital outlays rise 22 % year‑on‑year, financing transport, urban and energy projects while leveraging a 75 % own‑resource revenue base, underscoring fiscal sustainability [3].

2025‑26 – Real GSDP growth remains robust at 11.19 % and CPI falls to 2.45 %, while manufacturing maintains a four‑year average growth of 9.38 % (2021‑22 to 2024‑25) [2].

Feb 2, 2026 – Under the 16th Finance Commission, Tamil Nadu’s share of central devolution rises marginally to 4.097 % from 4.079 % in the 15th FC, while Karnataka and Kerala enjoy double‑digit gains; northern states’ collective share drops to 49.93 % [1].

Feb 2, 2026 – Experts warn that disaster‑response funding remains limited despite the post‑2015 flood fund model, urging a dedicated project fund for climate‑vulnerable states [1].

2031 (target) – Tamil Nadu sets a strategic goal to become a $1 trillion economy by 2031, leveraging its manufacturing strength, green‑hydrogen hub and expanding capital investments [4].

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