The state's Gross State Domestic Product increased from ₹15.71 lakh crore in 2023–24 to ₹17.23 lakh crore as of 17 March 2025.
Published Apr 05, 2025 | 9:53 PM ⚊ Updated Apr 07, 2025 | 2:45 PM
Synopsis: Tamil Nadu has recorded the fastest economic growth in India for 2024–25, far outpacing the national average, with key contributions from the services and industrial sectors, while the state also maintains a per capita income significantly above the national level. Experts attribute this performance to long-term investments in social development and a strategic economic shift from low-productivity agriculture to higher-value sectors.
Tamil Nadu has recorded the highest real economic growth among Indian states for 2024–25, with a growth rate of 9.69 percent.
The state’s per capita income also rose by 29 percent between 2022–23 and 2024–25 – the highest increase in the past decade.
According to data from the Union Ministry of Statistics and Programme Implementation, Tamil Nadu’s Gross State Domestic Product (GSDP) at constant prices (base year: 2011–12) increased from ₹15.71 lakh crore in 2023–24 to ₹17.23 lakh crore as of 17 March 2025.
The state’s GSDP growth rate has nearly doubled over the past decade – from 4.92 percent in 2014–15 to 9.69 percent in 2024–25.
Real economic growth has remained above 8 percent for three consecutive years:
This results in an average growth rate of 8.7 percent over the period.
Tamil Nadu’s growth of 9.69 percent is more than three times higher than the national rate of 2.2 percent for the same period, which fell from 8.4 percent at the end of 2023–24.
Tamil Nadu’s per capita income remains higher than the national average, a key indicator of economic prosperity.
According to the Tamil Nadu Economic Survey 2024–25, the state’s per capita income in 2022–23 stood at ₹2.78 lakh – 1.6 times the national average of ₹1.69 lakh.
As of 2025, per capita income in Tamil Nadu had reached ₹3.58 lakh at current prices, compared to ₹2.77 lakh in 2022–23. At constant prices, it rose from ₹1.79 lakh in 2023–24 to ₹1.96 lakh in 2024–25.
The state now has the second-highest per capita income in India. Karnataka leads with ₹3.80 lakh at current prices and ₹2.04 lakh at constant prices.
(Note: Growth data for 14 states and union territories – including Gujarat, Bihar, and Uttar Pradesh – have not yet been uploaded by the Union Ministry.)
Tamil Nadu’s growth has been largely driven by the services and industrial sectors.
The services sector now contributes around 53 percent to the state’s Gross State Value Added (GSVA), followed by the industrial sector at 37 percent and the primary sector at 10 percent.
In the services sector:
In the industrial sector:
The primary sector, which includes crops and livestock, showed weaker performance. Crop output contracted by -5.93 percent, while livestock grew by 3.84 percent.
In Tamil Nadu’s latest sectoral performance, the share of agriculture in the total GSDP has slightly declined, while the contributions from manufacturing and service sectors have increased.
However, Economist Prof. Jyothi Sivagnanam said that the reduction in agriculture’s share should not be viewed negatively.
He argued that the trend represents a shift towards sectors offering more stable income.
“This progress is favourable for achieving Chief Minister M K Stalin’s goal of making Tamil Nadu a $1 trillion economy,” he said.
“Also, with population control measures in place, the rise in per capita income is now yielding positive outcomes. In terms of overall economic growth, Tamil Nadu outpaces the national average by more than 3 percent.”
Prof Sivagnanam attributes much of the state’s economic performance to long-term investments in social sectors such as education, healthcare, and infrastructure, beginning in the 1960s and further accelerated by the present administration.
He also notes that more than 95 percent of private and foreign investments in India are concentrated in just a few states – including Maharashtra, Delhi, Gujarat, Karnataka, and Tamil Nadu.
Tamil Nadu’s advantage, he says, lies in its balanced growth model. This observation is supported by a white paper from the Paris-based independent think-tank Institut Montaigne.
Co-authored by political scientist Christophe Jaffrelot, the paper compares Gujarat, Bihar, and Tamil Nadu, highlighting that while Gujarat prioritises industrial growth and Bihar lags in key human development sectors, Tamil Nadu maintains a more even development across areas.
With this balance, the paper notes that Tamil Nadu has developed a highly skilled workforce, an active government, a favourable business environment, and a streamlined single-window clearance system – all of which make it a leading destination for investment.
Contrasting Tamil Nadu’s trajectory with broader national trends, Prof Sivagnanam points out that while initiatives such as Make in India, Production Linked Incentive (PLI) schemes, and Atmanirbhar Bharat (Self-Reliant India) have aimed to increase India’s manufacturing share, they have not succeeded in raising it above 17 percent.
In Tamil Nadu, however, manufacturing contributes a robust 33 percent to the economy.
When asked about the agricultural decline, he said: “It should not be considered a negative trend. In fact, in agriculture, many people work for very low wages.
For example, an entire family may work on just one acre of land, even though fewer workers are actually needed. Moving those excess workers into more productive sectors is actually a sign of economic progress.”
He also warned that India, at the national level, is showing a “worrying trend” of moving backward – from manufacturing and services back into agriculture. In contrast, Tamil Nadu is shifting its workforce from low-productivity to high-productivity sectors.
This transformation, he explains, aligns with Arthur Lewis’s theory of economic development, i.e, The Lewis Model, which outlines a shift from agriculture to manufacturing and then to services as a natural path for growing economies.
He continued: “While India is witnessing a reverse trend over the past decade – something never seen in any growing economy – meanwhile Tamil Nadu stands out by moving decisively towards higher productivity and sustainable growth.”
(Edited by Dese Gowda)
