Tamil Nadu’s economic rise and the discontent beneath

Tamil Nadu's growth has also created a situation where reality sometimes falls short of economic aspirations

Tamil Nadu is one of India’s richest states. It is also a state which has seen a remarkable economic turnaround in the past couple of decades. This growth has improved quality of life and allowed successive governments to offer more economic support. But it has also created a situation where reality sometimes falls short of economic aspirations.

FILE PHOTO: Workers assemble Ather 450X electric scooter inside Ather Energy's manufacturing facility in Hosur (REUTERS)

Tamil Nadu’s share in India’s GDP has been increasing

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  Tamil Nadu’s share in India’s GDP has been increasing

  Tamil Nadu’s nominal GSDP was 9.4% of India’s GDP in 2024-25—the latest period for which data is available on the Centre for Monitoring Indian Economy (CMIE) database— making it the second largest (after Maharashtra) among states in terms of contribution to national output. Even in nominal per capita NSDP terms, Tamil Nadu’s income levels have been widening their gap vis-à-vis the national average. The gap was 1.5 times in 2011-12 and increased to 1.7 times by 2024-25. This is a remarkable achievement for the state by all means.
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  Tamil Nadu’s living standards are much higher than the national average, but people’s perceptions might be different

  India does not have income data. Numbers such as per capita GDP do not represent mass income standards because they also include earnings of companies. The best proxy for mass living standards in India is consumption data. Tamil Nadu ranks high in terms of household consumption spending among Indian states. However, this does not necessarily mean that Tamil Nadu’s population sees it that way. This is because the gap between per capita consumption and per capita GDP is among the widest in Tamil Nadu, something other rich states also show. This could very well lead to a situation where the gap between aspirations and actual economic conditions is larger not smaller in Tamil Nadu.
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  This is what has made economic populism a political must in the state

  Economic populism has been an integral component of Tamil Nadu’s politics for a long time. Despite the state doing much better on the growth front in the more recent past, the demand for such populism has only increased rather than decreased in the state’s politics. This is best seen in the fact that Tamil Nadu’s spending on subsidies—as given in RBI’s State Budget data—has consistently been the highest in India and increased at a greater pace than most other states.