Kearney study recommends measures to improve Tamil Nadu’s fiscal capacity
The State’s core challenge is not that it borrows too much, but that it collects and spends less efficiently than comparable large States, the study says
Tamil Nadu faces a fiscal challenge, with a revenue deficit of ₹78,324 crore, outstanding debt exceeding ₹10 lakh crore, and an own-tax-to-GSDP ratio of 5.45%, according to a Kearney report. The report suggests that narrowing this gap could add over ₹1.2 lakh crore in annual fiscal capacity, without the need for new taxes or borrowing, through improved compliance, valuation, monitoring, and project discipline.
The study recommends setting first-year targets for GST compliance, guideline-value revision, grant drawdown, mining reconciliation, procurement competition, and capital project readiness, with departmental accountability linked to delivery. Tamil Nadu's GST-to-GSDP ratio is lower than that of Maharashtra, Gujarat, and Karnataka, indicating an opportunity to boost collections by increasing the share of economic activity in the formal GST-compliant sector and tightening enforcement against existing leakages.
The report also highlights the need for periodic guideline-value revisions, finer geographic granularity, and the use of actual registered-transaction data to maintain a stable stamp-duty-to-GSDP ratio.
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