Tamil Nadu has the highest amount of outstanding debt among all States and Union Territories. The State’s outstanding debt stood, as per budget estimates for 2022-23, at ₹7.54-lakh crore followed by the country’s most populous State Uttar Pradesh at ₹7.10-lakh crore, according to a written response shared by the Union Finance Minister Nirmala Sitharaman in response to questions raised by a member of parliament, Velusamy P. 

The outstanding liabilities of Maharashtra, the country’s largest economy measured in terms of Gross State Domestic Product (GSDP), stood at ₹6.80-lakh crore as per budget estimates for 2022-23. It was followed by West Bengal (₹6.08-lakh crore), Rajasthan (₹5.37-lakh crore) and Karnataka (₹5.35-lakh crore). The union territory of Puducherry had the lowest outstanding debt of ₹11,651 crore. 

The data on outstanding liabilities shared by the Union Finance ministry were based on RBI’s ‘State finances: A study of budgets of 2022-23’ report published earlier this year. However, several States have since tabled their budget for FY24 and hence the liabilities budgeted for FY23 would have gone for a revision. 

For instance, Tamil Nadu has budgeted an outstanding debt ₹7.26-lakh crore for FY24. This constitutes 25.63 per cent of GSDP in 2023-24, well within the 29.1 per cent for limit set by the Fifteenth Finance Commission. 

Tamil Nadu topping the list of States with highest debt is not surprising as the State has consistently been the highest market borrower in the last three years.  

Market borrowings of States is done through issue of bonds under State Development Loans (SDLs). According to RBI data, Tamil Nadu’s gross market borrowings through SDLs stood at ₹87,000 crore in FY23 and FY22 after raising ₹87,977 crore in FY21. 

As per 2023-24 budget, Tamil Nadu government plans to borrow a total amount of ₹1.43-lakh crore in 2023-24 and make repayments of ₹51,331.79 crore.

Uttar Pradesh’s debt burden is expected to touch ₹7.84-lakh crore in 2023-24, almost 40 per cent higher than the previous year while Maharashtra’s outstanding debt is set to touch ₹7.07-lakh crore at the end of the current fiscal.