Four-and-a-half years after then–Finance Minister Palanivel Thiaga Rajan (PTR) released his high-profile White Paper warning that Tamil Nadu’s finances had been “destroyed” by the previous AIADMK government, fresh budget documents show that the State’s debt burden per household has climbed dramatically under the DMK’s own tenure.
The Promise vs The Reality
In 2021, Finance Minister Palanivel Thiaga Rajan (PTR) released a White Paper painting a grim picture of state finances, blaming the previous AIADMK regime for mismanagement that had pushed debt to ₹2.63 lakh per family. He promised to “set right the present fiscal situation in Tamil Nadu” within five years through “extraordinary reforms” and “dramatic transformation.”
Four years later, the transformation has been dramatic indeed – but in the wrong direction. According to budget documents and Ministry of Finance data, the debt burden has ballooned to ₹4.65 lakh per household – an increase of approximately ₹2.02 lakh for every family in the state.
Year-by-Year Descent into Debt
The numbers reveal a consistent pattern of escalating borrowing, assuming there are 2 crore households for a population of approximately 7-8 crores:
2021: Total debt of ₹5.7 lakh crore (₹5,70,000 crore) that translates to ₹2.63 lakh per household (White Paper baseline)
2022: Total debt of ₹6.67 lakh crore (₹6,67,975 crore) that translates to ₹3.34 lakh per household (27% increase)
2023: Total debt of ₹7.41 lakh crore (₹7,41,497 crore) that translates to ₹3.70 lakh per household (41% cumulative increase)
2024: Total debt of ₹8.34 lakh crore (₹8,34,544 crore) that translates to ₹4.17 lakh per household (59% cumulative increase)
2025: Projected debt of ₹9.29 lakh crore (₹9,29,959 crore) that translates to ₹4.65 lakh per household (79% cumulative increase)
This represents one of the fastest accumulations of sub-national debt in India’s recent history.
The “Dravidian Borrowing Model” Exposed
The DMK government has continued what financial analysts describe as the “Dravidian Borrowing Model” – financing popular welfare schemes and subsidies through massive debt rather than revenue generation or fiscal discipline.
Despite PTR’s 2021 diagnosis of “lax tax administration” and identification of multiple revenue leaks, the current government’s solution has been to borrow unprecedented amounts. The state plans to borrow ₹1.62 lakh crore in 2025-26 alone – more than the entire annual budget of many smaller Indian states.
Empty Promises, Real Consequences
The government’s 2025 budget claims to project a path toward fiscal consolidation, with debt as percentage of GSDP expected to decline from 26.07% in 2025-26 to 24.85% in 2027-28. However, these projections come after four years of explosive debt growth that has fundamentally compromised the state’s financial health.
The situation reveals the fundamental contradiction of Dravidian populism: promising both expansive welfare and fiscal responsibility while delivering neither. The massive borrowing spree has effectively mortgaged the future of Tamil Nadu’s families to fund current expenditures, with each household now bearing nearly double the debt burden they inherited in 2021.
As Tamil Nadu continues to grapple with revenue deficits and struggling public sector undertakings, the DMK’s legacy appears to be not the “model state” PTR envisioned, but rather the perfect case study of how political populism, when divorced from fiscal reality, creates intergenerational financial burdens for ordinary citizens.
Subscribe to our channels on WhatsApp, Telegram, Instagram and YouTube to get the best stories of the day delivered to you personally.