Since FY21, Tamil Nadu, as a high Gross State Domestic Product (GSDP) state, has been on the top spot in market borrowings
For the fifth consecutive year, Tamil Nadu is set to record the highest market borrowings among all states in fiscal year 2025.
Tamil Nadu’s market borrowings in the 11 months of FY25 (April – February) stood at ₹1,01,025 crore – the highest among all states, as per the Reserve Bank of India’s latest data. With states typically clocking a bulk of their annual market borrowings in the month of March, analysts note that Tamil Nadu is likely to end the year as the top borrower.
Since FY21, Tamil Nadu, as a high Gross State Domestic Product (GSDP) state, has been on the top spot in market borrowings. The state had gross market borrowings of ₹87,977 crore in FY21, ₹87,000 in FY22, ₹87,000 in FY23 and ₹1,13,001 in FY24, as per RBI data.
Further, Tamil Nadu has plans to borrow ₹20,000 crore in the first quarter of FY26, according to the indicative market borrowings schedule of states released by the RBI.
For FY25 (April-Feb), Maharashtra with ₹99,000 crore of gross market borrowings is at second spot. Karnataka, at third spot, has borrowed ₹72,025 crore, and Andhra Pradesh is at fourth spot with ₹70,057 crore. Rajasthan with ₹63,565 crore rounds up the top five.
TN’s increased borrowings comes at a time when it has budgeted for a 22 per cent higher capex in FY26 when compared to FY25(RE). Further, the state’s finance minister also said in the budget speech that transfers from the Centre in the form of grants-in-aid and share in central taxes (as a proportion of total revenue receipts) have reduced.
Tamil Nadu’s Debt to Gross State Domestic Product (GSDP) ratio was budgeted at 26.07 per cent in FY26(BE), within the target of 28.7 per cent under the 15th Finance Commission. The state’s outstanding debt-to-GSDP ratio for FY25 (RE) is at 26.43 per cent, and the state plans to borrow a total amount of ₹1,62,096 crore during FY26.
As per a recent analysis of market borrowings by India Ratings and Research, TN has budgeted gross market borrowings of ₹1,36,500 crore for FY26, which is a record high. However, as a percentage of GSDP, this borrowing will be at 3.8 per cent of GSDP in FY26(BE), which is lower than the 4 per cent of GSDP in FY25(RE).
State borrowings include those from market, whereby states raise funds through issue of bonds known as State Development Loans (SDLs). These borrowings typically account for around 75-80 per cent of the total borrowings.
“Tamil Nadu’s high borrowings amongst all the states is in alignment with the state’s nominal GSDP, which is the second largest in the country after Maharashtra. In addition, the favourable factor has been the gradual moderation in the fiscal deficit which is now closer to the prudential level of 3 per cent of GSDP,” Paras Jasrai, Associate Director, India Ratings and Research, said.
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Published on May 12, 2025