Tamil Nadu is growing rapidly. Why are its revenues not keeping pace?

For decades, Tamil Nadu has been among India’s most diversified and industrialised economies. It manufactures automobiles and electronics, exports textiles, attracts global investment, builds highways and industrial parks, and has steadily expanded its services sector. By most conventional measures, the economy has continued to grow.Yet, the government’s latest White Paper on the state’s finances shows that even as the economy expanded in the post-pandemic years, the government’s own finances weakened. Revenue has failed to keep pace with economic growth and debt has continued to rise, thus narrowing the fiscal space for development activities.It is against this backdrop that the Tamil Nadu government has now constituted the Revenue Augmentation Committee under former Planning Commission d