K. Annamalai, former Bharatiya Janata Party (BJP) Tamil Nadu unit chief, on Friday, 19 June said the White Paper released by the TVK government on Tamil Nadu's finances has exposed the depth of fiscal deterioration over the past five years and made the case for urgent corrective action to restore the state's financial health.

Key Findings from the White Paper

Reviewing the document, Annamalai noted that the White Paper's findings came as little surprise to economists and policy observers who had long tracked the state's finances. He acknowledged, however, that the report offers a comprehensive, benchmarked assessment of Tamil Nadu's fiscal position relative to other similarly industrialised states — bringing much-needed clarity to the scale of the challenge.

According to Annamalai, Tamil Nadu's outstanding debt has reached nearly ₹10 lakh crore, with per capita outstanding debt rising to ₹1,28,934. Critically, interest payments now consume 22.8 per cent of the state's total revenue receipts — a level that severely limits the government's ability to fund development and welfare programmes.

Revenue Growth Falling Behind Economic Expansion

Annamalai also flagged a declining trend in the state's Own Tax Revenue (OTR) to Gross State Domestic Product (GSDP) ratio, which slipped from 5.93 per cent in 2021-22 to 5.45 per cent in 2025-26. This contraction, he argued, signals that revenue mobilisation is not keeping pace with economic growth — raising serious questions about the long-term sustainability of public finances.

He further pointed to the financial condition of major state public sector undertakings (PSUs), noting that entities in the power, transport, and civil supplies sectors collectively carry a debt burden of ₹3.18 lakh crore, compounding the state's overall fiscal stress.

Corruption and Administrative Inefficiencies Flagged

Citing observations within the White Paper itself, Annamalai alleged that systemic corruption and administrative inefficiencies have led to significant revenue losses. Among the specific concerns raised was the suppression of registration revenues through the undervaluation of real estate transactions — a practice that reportedly erodes a key source of state income.

Demographic Pressure Adds Urgency

Annamalai warned that Tamil Nadu has limited time to reverse these trends, pointing to projections that the state's working-age population will decline by 2031. This demographic shift, he said, makes fiscal consolidation and revenue strengthening all the more urgent. 'The shrinking working-age population leaves the state with very little time to recover and strengthen its revenue base. This is a serious issue,' he said.

He was careful to add that the TVK government must not use the White Paper as cover for non-performance, urging the administration to treat it as a roadmap for reform rather than an explanation for inaction.

Annamalai's Prescription: An Expert Consultation Panel

To chart a path forward, Annamalai proposed the formation of a functional consultation group comprising economists, academicians, industry experts, and sector specialists. The panel, he said, should be tasked with developing practical solutions and guiding Tamil Nadu toward long-term fiscal sustainability. This comes amid growing concern among fiscal analysts that without structural reforms to revenue collection and PSU finances, the state's debt trajectory could become increasingly difficult to manage.