Tamil Nadu sets a new high with 9.69% growth

Tamil Nadu’s real economic growth rate of 9.69% for 2024-25 marks the highest for any State in the country, besides being the highest for the State in the past 10 years.

At constant prices (base year: 2011-12), the value of the Gross State Domestic Product (GSDP) of Tamil Nadu, estimated at ₹15,71,368 crore for 2023-24, had risen to ₹17,23,698 crore for 2024-25, according to the latest data available on the website of the Union Ministry of Statistics and Programme Implementation (both for advance estimates for the States and the second advance estimates nationwide).

The previous high was 8.59% during 2017-18. The lowest (0.07%) was recorded during 2020-21, the year of the COVID-19 pandemic. The silver lining then was that at least Tamil Nadu recorded a positive growth, whereas many States had posted a negative growth.

The term, real growth rate, denotes the rate that is exclusive of inflation. The one that includes inflation is called nominal economic growth rate. For instance, Tamil Nadu’s nominal growth rate for 2024-25 is 14.02%, also the highest among States.

Gujarat, Bihar, and Uttar Pradesh are among those 14 States and Union Territories whose growth rate data for the year have not been uploaded on the Union Ministry’s website.

The figure of real economic growth rate, as released by the Union Ministry, aligns with the projection in the State’s maiden Economic Survey launched in the second week of last month. The survey had forecasted a growth of over 8% and the working paper from the Madras School of Economics (MSE), authored by veteran economists C. Rangarajan and K.R. Shanmugam and published in July 2024, predicted 9.3%. Eventually, the growth accomplished was higher than the two estimates.

The State’s performance has been driven by a 12.7% growth in the tertiary (services) sector and 9% in the secondary. The primary sector’s performance is abysmally poor, with 0.15%. The tertiary sector’s contribution to the State’s Gross State Value Added is around 53%, followed by the secondary with 37% and the primary with 10%.

Among the segments under the tertiary and secondary sectors, real estate, which covers ownership of dwelling and professional services too, has done well with 13.6%, followed by communication (and services related to broadcasting) at 13%, and trade, repair, hotels, and restaurants at 11.7%. All these segments are tertiary. As for the secondary sector, manufacturing and construction have grown at 8% and 10.6% respectively.

In the primary sector, crops and livestock are the dominant segments. Both have performed below par. The crops segment saw -5.93% growth and livestock recorded a modest 3.84%.

Dr. Shanmugam, who is also the former Director of MSE, said Tamil Nadu had been “consistently achieving” 8% or more since 2021-22. If it maintained 9.7% in the coming years, along with strong exports, it would be a trillion-dollar economy by 2032-33. “If all sectors grow 0.5 percentage point higher than what they did in 2024-25, the State’s growth will be around 10.7% in 2025-26,” he said, adding that the budget document had also forecasted 14.5% nominal growth during 2025-26.

Published - April 05, 2025 12:35 am IST