Published Feb 16, 2026 | 10:55 PM ⚊ Updated Feb 16, 2026 | 10:57 PM
Tamil Nadu CM MK Stalin. Credit: x.com/mkstalin
Synopsis: Tamil Nadu recorded real GSDP growth of 11.19 percent in 2024–25, the highest among major states and well above the national average, according to the Economic Survey of Tamil Nadu recently released by the state government ahead of the interim Budget. The survey attributes this performance to strong manufacturing growth, sustained capital and social sector spending, contained inflation and a balanced sectoral structure that has raised per capita income to ₹3.62 lakh, 1.77 times the national average.
Ahead of the 2026 interim Budget and months before the Assembly elections, the Tamil Nadu government released its second Economic Survey of Tamil Nadu (2025–26), which traces the state’s economic performance under the DMK administration over the past five years.
The state recorded real Gross State Domestic Product (GSDP) growth of 11.19 percent in 2024–25, the highest among major Indian states and more than four percentage points above India’s national growth rate of 6.5 percent, according to the survey. This is the state’s strongest economic performance in 14 years, surpassing its own post-2010 peak of 13.12 percent.
In nominal terms, Tamil Nadu’s economy expanded to ₹31.19 lakh crore, registering nearly 16 percent growth in a single year. The survey projects this to rise to ₹36.57 lakh crore in 2025–26 and ₹41.03 lakh crore in 2026–27, placing the state on course to achieve its stated ambition of becoming a $1 trillion economy by 2030.
One clear break from the national trend is manufacturing growth.
Tamil Nadu’s manufacturing sector recorded real growth of 14.74 percent in 2024–25, compared with the all-India average of 4.5 percent.
From 2021–22 to 2024–25, Tamil Nadu posted average manufacturing growth of 9.38 percent, the highest among Indian states. By comparison, other industrial states such as Jharkhand (8.77 percent) and Karnataka (8.73 percent) recorded slower averages, while several large states struggled to revive manufacturing.
The survey says Tamil Nadu now contributes 12.65 percent of India’s manufacturing GDP, though it accounts for only 6 percent of the population and 4 percent of the land area. It also hosts more than 40,000 factories, the highest in India, alongside 39 lakh Udyam-registered MSMEs, showing the scale and diversity of its industrial base.
Services also performed strongly, registering real growth of 11.3 percent. High-growth segments included real estate, transport, hospitality, public administration and other services, all of which posted double-digit expansion.
The survey says Tamil Nadu avoided premature de-industrialisation by sustaining a high industrial share alongside rapid services growth. Modern services expanded largely in support of manufacturing through IT clusters, logistics hubs and port-linked activity concentrated around industrial centres such as Chennai, Coimbatore and Hosur.
Agriculture accounts for 6.6 percent of Tamil Nadu’s Gross State Value Added, but the state remains one of India’s most productive farming regions.
In 2024–25, Tamil Nadu ranked first in ragi and sugarcane yields, second in oilseeds and third in groundnut. This points to yield-led growth rather than expansion of cultivated area.
Productivity gains came from improved land use. The gross cropped area rose to 62.25 lakh hectares and crop intensity reached 1.29, which increased output from the same land base. Agricultural investment also rose. Farm credit more than doubled from ₹2.23 lakh crore in 2019–20 to ₹4.52 lakh crore in 2023–24, of which 78 percent went to small and marginal farmers. This shift towards higher input use, mechanisation and irrigation continued despite climate stress.
Unlike many states where economic activity skews towards either services or agriculture, Tamil Nadu has a balanced sectoral composition.
Services account for 53.6 percent of GSVA, the secondary (industrial) sector 33.1 percent and the primary sector 13.4 percent.
This structure mirrors several middle-income and developed economies, where a strong industrial base complements a large services sector. Economists have long said India’s weak manufacturing share has constrained job creation. The survey says Tamil Nadu’s experience offers an alternative path.
In 2024–25, the secondary sector, not services, led growth. This reverses the national pattern, where services remain the main driver.
Between 2020–21 and 2025–26, the state invested ₹2.54 lakh crore in capital projects, supporting construction, logistics and industrial corridors at a time when national investment growth slowed. Social sector spending rose from ₹1.13 lakh crore in 2021–22 to ₹1.57 lakh crore in 2025–26, which stabilised consumption and helped contain inflation. Inflation fell to 2.3 percent in 2025–26.
The survey shows a widening gap between Tamil Nadu and the national average in income.
In 2024–25, per capita income in Tamil Nadu reached ₹3.62 lakh, 1.77 times the national average of ₹2.05 lakh. Among large states, Tamil Nadu ranks third, behind a small group of higher-income regions.
Growth is not confined to Chennai. Cities such as Coimbatore, Tiruppur, Madurai, Salem and Tiruchirappalli contribute significantly to the state economy. Every district now falls under at least one industrial corridor project, making Tamil Nadu the only state with such wide industrial coverage.
District-level data show that 32 of Tamil Nadu’s 38 districts report per capita incomes above the national average, an achievement few states match, including some with higher headline GDP.
Labour market indicators also compare favourably with national figures.
The Labour Force Participation Rate rose from 71.5 percent in 2021–22 to 72.1 percent in 2023–24, slightly above India’s 71.3 percent. The unemployment rate fell to 3.5 percent, showing both job creation and stronger absorption of labour into non-agricultural sectors.
The survey points to steady growth in regular salaried employment, a metric often weak in India’s growth story. Labour has shifted from agriculture to manufacturing and services in a relatively orderly way, avoiding the large-scale distress migration seen in parts of northern and eastern India.
But the survey also highlights a gendered employment cycle. Employment rates among younger women remain low: only 23.4 percent of married women aged 20–29 were employed in 2023–24, well below the national average of 32.8 percent for the same group, according to PLFS data cited in the survey.
Women’s employment rises in later years. In the 40–49 age group, Tamil Nadu’s female employment-to-population ratio exceeds the national average and remains relatively strong among women aged 50–59 and 60–64. This pattern is not seen among men, whose employment rates stay high and stable across age groups.
This age-wise divergence points to delayed entry or temporary withdrawal from the labour market among women due to education, childcare and domestic responsibilities, followed by re-entry as care burdens ease. The pattern shows that care work, not lack of capability, shapes women’s employment outcomes in the state.
On the fiscal front, the survey says Tamil Nadu sharply increased capital expenditure after the pandemic, with total capital spending between 2020–21 and 2025–26 reaching ₹2.54 lakh crore.
Debt levels rose during the pandemic, but the debt-to-GSDP ratio remains within the limits set by the Fifteenth Finance Commission. The survey warns that future pressures from pay revisions, pensions and GST restructuring could tighten fiscal space, making disciplined spending necessary.
During a period of global inflation, Tamil Nadu contained price rises more effectively than many states.
Retail inflation fell from 5.4 percent in 2023–24 to 4.6 percent in 2024–25, and further to 2.3 percent in 2025–26 (up to December 2025). Urban inflation declined to 2.5 percent and rural inflation to 2.1 percent.
Food inflation, a politically sensitive issue, fell to near zero. The survey attributes this to the public distribution system, subsidised essentials, electricity support and income-support schemes, which stabilised household consumption.
In 2024–25, Tamil Nadu ranked among the 10 states with the lowest inflation in India.
The survey makes its clearest ideological claim in its treatment of welfare.
The Tamil Nadu government presents welfare spending not as a fiscal burden but as economic infrastructure. Social sector spending rose from ₹1,13,268 crore in 2021–22 to ₹1,57,864 crore in 2025–26, covering education, nutrition, health, housing, transport and income support.
Schemes such as the Chief Minister’s Breakfast Scheme, Naan Mudhalvan, Pudhumai Penn, Tamizh Pudhalvan and Kalaignar Magalir Urimai Thittam are presented as demand-stabilising measures that prevented a consumption slowdown during periods of global volatility.
The survey says this approach brought historically excluded groups into active economic participation, strengthening both equity and efficiency.
