Achieving One Trillion Dollar Economy for Tamil Nadu: Some Implications and Concerns




This study examines whether Tamil Nadu’s economy will become a US $1 trillion economy by 2030, given its current slow growth regime, inflation, and rupee depreciation. Our analyses indicate that, assuming an inflation rate of 5% and 2% exchange rate depreciation per annum, the Tamil Nadu economy needs to grow at a real growth rate of 13.2% per annum for 8 consecutive years from 2023-24 to 2030-31 to reach the US $1 trillion target. Considering the growth contributions of sub sectors, this study simulates multiple growth strategies to achieve 9% overall growth, which would achieve the target in 2033-34. Further, it examines whether export promotion will help to achieve this target. Finally, it shows that the current level of debt-GSDP ratio is a hindrance to growth. It suggests that ensuring 14% nominal (i.e., 9% real) growth of economy, the state should target for a revenue surplus from 2023-24 onwards, such that it contains its fiscal deficit to only 2% level and obtains a sustainable threshold debt level of about 18% in 2034-35.


Economic Growth, Exchange Rate Movement, Incremental Capital Output Ratio, Sustainable Debt Threshold


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Authors Bio

Rangarajan, Madras School of Economics

C. Rangarajan is Chairman of Madras School of Economics, India

K.R. Shanmugam, Madras School of Economics

K.R. Shanmugam is Director and Professor, Madras School of Economics, India


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