Tamil Nadu Finance Minister Denies Debt Trap Allegations, Refutes Opposition’s Claims

Chennai: Tamil Nadu Finance Minister Thangam Thennarasu strongly refuted allegations made by AIADMK General Secretary and Opposition Leader Edappadi K. Palaniswami (EPS) regarding the state’s financial condition.

The minister assured that Tamil Nadu is not facing a debt trap and described EPS’s claims as unfounded.

Tamil Nadu’s Borrowing is Within Prescribed Limits

Speaking to reporters in Virudhunagar, Thennarasu emphasized that the state’s borrowing and repayment capacities are well within the limits set by the Finance Commission. He rejected the allegations of financial mismanagement under the DMK government, terming them as “baseless and politically motivated.”

“Edappadi Palaniswami is trying to create unnecessary panic with his claims, which lack a basic understanding of fiscal management,” Thennarasu said. He elaborated that a state’s borrowing is directly proportional to its domestic production levels and overall economic growth, and Tamil Nadu’s fiscal health remains robust.

EPS’s Allegations of Rising Debt Levels

Earlier, EPS criticized the DMK government during the debate on the Motion of Thanks to Governor R.N. Ravi’s address, raising concerns over the rising debt levels in Tamil Nadu. He presented data showing an increase in the state’s borrowing over the years:

• 2021-22: ₹84,747 crore
• 2022-23: ₹73,957 crore
• 2023-24: ₹90,369 crore
• 2024-25 (Estimated): ₹1,04,319 crore

EPS claimed that the total debt could surpass ₹5 lakh crore by the end of the DMK government’s term and accused the ruling party of pushing the state towards bankruptcy.

Minister Thennarasu’s Response: Debt in Proportion to GSDP Growth

Addressing these allegations, Thennarasu highlighted that Tamil Nadu’s growing debt levels align with its expanding Gross State Domestic Product (GSDP) and annual budget size. He pointed out that Tamil Nadu’s GSDP has reached an impressive ₹31.57 lakh crore, while the state budget has grown to over ₹4 lakh crore, significantly enhancing debt repayment capabilities.

He further clarified that Tamil Nadu’s borrowing remains within the fiscal norms prescribed by the Finance Commission and emphasized that there is no risk of a debt trap.

“The state’s financial indicators are sound. Borrowing is proportional to economic growth, and Tamil Nadu’s fiscal management adheres to the highest standards,” Thennarasu explained.

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Growth-Driven Borrowing Strategy

The minister also underscored the government’s focus on using borrowed funds for growth-oriented investments, particularly in infrastructure and social welfare schemes. He assured that these investments are yielding long-term benefits for the state’s economy and residents.

“The DMK government is committed to fiscal prudence. Our borrowing is being utilized for productive purposes, ensuring sustainable growth for Tamil Nadu,” he added.

The Opposition’s Political Agenda

Thennarasu criticized the AIADMK for spreading misinformation about the state’s finances. He accused EPS of attempting to divert public attention from his party’s lack of constructive contributions in the Assembly.

“This is a clear attempt to politicize financial data without understanding the larger economic picture. Tamil Nadu’s fiscal health remains strong, and the government is committed to maintaining transparency,” Thennarasu stated.

Tamil Nadu’s Resilient Economy

The Finance Minister concluded by highlighting Tamil Nadu’s position as one of India’s leading states in terms of economic performance. He pointed to the state’s robust industrial base, consistent GSDP growth, and expanding budget as evidence of sound financial management.

“Our government is focused on growth and development, ensuring that Tamil Nadu remains a model state in India. There is no cause for concern over the state’s debt levels, as they are fully under control and aligned with fiscal guidelines,” Thennarasu reassured.