“Tamil Nadu’s Debt Trajectory Raises Alarm: Debt-GSDP At 27%, Nearly Half Of Borrowing Goes To Consumption”, TheCommuneMag, 5 Sep 2026.

“Tamil Nadu’s debt trajectory should set off alarm bells. The State’s debt-GSDP ratio is around 27%, significantly above the 23% sustainable level suggested by the State government’s own economic consultant, as reported in The Hindu.

Economist K.R. Shanmugam has argued that Tamil Nadu needs to bring its debt burden down to 23%. The figure is itself higher than the 20% prudent debt-GSDP ratio recommended for States by the Fiscal Responsibility and Budget Management (FRBM) Committee headed by former civil servant N.K. Singh.

Shanmugam has suggested that Tamil Nadu could be allowed an additional three percentage points because of its relatively stronger macroeconomic performance. Even with that relaxation, however, the State’s current ratio remains well above the suggested sustainable level.

The Bigger Problem Is How The Borrowed Money Is Used

Borrowing, by itself, is not necessarily a problem.

A State can borrow to build roads, infrastructure, industrial projects and other productive assets that generate economic activity and future revenue. Such borrowing can support growth and improve the State’s capacity to service its debt.

The concern arises when borrowing increasingly goes towards expenditure that does not create corresponding productive assets.

That is where Tamil Nadu’s finances raise questions………….”

Read the full article at TheCommuneMag.