With a diversified economy, robust infrastructure, and progressive governance, Tamil Nadu (T.N.) has emerged as a national leader in economic development and inclusive growth.
According to the Reserve Bank of India, T.N., the second largest economy, has increased its GSDP at current prices from ₹26.88 lakh core in 2023-24 to ₹31.19 lakh crore in 2024-25, recording a 16% growth, the fastest among major States. The State has also maintained consistently high growth rates over the past three years — 15.91% in 2021-22, 14.47% in 2022-23, and 13.34% in 2023-24.
In real terms, T.N. recorded an impressive double-digit growth of 11.2% in 2024-25 (constant prices), making it the fastest-growing State in the country. This significantly outpaces the national average growth rate of 6.5%.
Growth in various sectors
The secondary sector, particularly manufacturing, has been the principal driver of this strong economic performance. T.N. is a major industrial power house. Over the last four years, the manufacturing GSDP of T.N. increased by ₹1.46 lakh crore, nearly double the increase recorded by the top industrial State, Maharashtra (₹0.71 lakh crore). T.N. leads all States in the four-year average real growth of manufacturing (2021-22 to 2024-25) at 9.38%.
The State hosts 40,121 factories and employs 24.75 lakh factory workers, ranking first nationally. It also ranks third in the MSME sector, with over 39 lakh Udyam-registered micro, small and medium enterprises, highlighting its strong entrepreneurial ecosystem. The construction sector too supported growth, expanding by 15.93% in 2023-24 and 11.56% in 2024-25.
The services sector, accounting for 53.6% of State’s GVA, registered a robust real growth of 11.3% in 2024-25. Several sub-sectors posted double-digit growth, including real estate (12.42%), public administration (14.2%), transport, storage and comminication (11.29%), and other miscellaneous services (12.49%), reflecting broad-based expansion.
T.N. has the largest number of technical institutions in India (955 as of 2024-25), producing a highly skilled workforce that supports both manufacturing and services. The availability of a disciplined and technically proficient labour force continues to attract multinational corporations. The State is actively investing in research parks, incubation centres, and innovation clusters to promote a knowledge-driven and technology-oriented economy, complemented by forward-looking industrial and export policies.
T.N. consistently ranks first in exports of electronic, textiles, and leather products, and second in engineering exports. Its total merchandise exports nearly doubled from $26.15 billion in 2020-21 to $52.07 billion in 2024-25. T.N. is a major hub for the automobile industry. It is also a pioneer in renewable energy. In a significant achievement, every district in T.N. is now covered under one or more industrial corridor projects, making it the only State with such extensive industrial integration. Its installed power capacity substantially increased during the 2021-22 to 2024-25 period (35,139 megawatt to 42,772 megawatt).
T.N. consistently ranks among the top States in attracting Foreign Direct Investment (FDI). While India’s total FDI equity inflows declined from $46.03 billion in 2022-23 to $44.42 billion in 2023-24 amid global investment uncertainties, T.N.’s FDI inflows rose from $2,169 million to $2,436 million and further to $3,681 million in the subsequent year.
This performance reflects the State government’s proactive investment promotion strategy. At the Global Investors Meet 2024, T.N. signed 631 MoUs worth ₹6.64 trillion, signaling strong investor confidence. Additionally, the Chief Minister’s investment promotion visits to the U.S., the U.K. and Germany during 2024–25 secured new industrial commitments amounting to ₹23,000 crore.
Welfare measures
The State has implemented several innovative welfare schemes focused on education, health, women’s empowerment, and social inclusion, including Kalaignar Magalir Urimai Thittam, Magalir Vidiyal Payanam Thittam, Mudhalvarin Kaakkum Karangal Scheme, Naan Mudhalvan Thittam, and the Chief Minister’s Breakfast Scheme for children.
With successful implementation of these schemes, T.N. has achieved a low infant mortality rate (12 per 1,000 live births in 2023), low birth rate (12 in 2023), and one of the lowest rates of multidimensionally poverty (1.43% in 2022-23). It ranks third in life expectancy at 73.4 years.
T.N. ranks first in Gross Enrolment Ratio (GER) in higher education at 47%, compared to the national average of 28.4% and the third in female GER at 47.3%. It also ranks first in the Export Preparedness Index, second in the credit-deposit ratio (120.5%), third in total exports ($52,073.59 million), and third in per capita (NSDP) income (₹3.62 lakh) in 2024-25. These data demonstrate the success of T.N.’s welfare-led growth model in achieving broad-based development.
On the fiscal front, T.N. remains stable, despite a decline in the Centre’s transfers. The fiscal deficit is projected at 3% of GSDP in 2025-26 BE, while the debt-GSDP declined from 27% in 2021-22 to 26% in 2024-25 BE.
T.N.’s strong growth performance, low inflation, rising FDI inflows, and robust export growth provide a solid foundation for achieving its $1 trillion economy goal by 2031. Even in the face of global tariff pressures, currency volatility, and reduced Central fiscal support, T.N. is on track to reach this milestone.
K. R. Shanmugam, Economic consultant to the Government of Tamil Nadu and former director, Madras School of Economics
Published – December 16, 2025 01:07 am IST
