Where Did the Money Come From? (2021–2026)
Think of the Tamil Nadu government like a household. Every year, money comes in from different places. And every year, money goes out to pay for things. Over 5 years (2021 to 2026), this is how the government got its money:
Total 5-Year Income: ₹18.11 lakh crore
Almost half of all income came from taxes that Tamil Nadu collected itself. But more than one in every four rupees came from loans — money the government **borrowed and has to pay back**.
The 5-Year Yearly Breakdown
Every year, the government's total income grew. But notice: the **money from the Central Government as grants went DOWN** from ₹39,301 crore in 2021-22 to just ₹21,500 crore in 2025-26. That is a DROP of 45% in just 5 years.
Tamil Nadu's Own Taxes: What They Are
When you buy things, when you register land, when you buy petrol, or when you buy alcohol — the government collects money. This is called 'Own Tax Revenue' (SOTR).
Key Problem:
- 01
The state collects taxes worth about **5.93% to 6.2% of GSDP** (its economy size).
- 02
In 2011-12, this was **7.92% of GSDP** — much higher.
- 03
**Why did it fall?** When GST was introduced, states lost the power to set some tax rates themselves.
- 04
Tamil Nadu ranks **18th among all major states** in how much non-tax revenue it collects. There is a big gap in what it could collect vs. what it actually collects.
Money from the Central Government: The Unfair Math
Every state in India gets a share of the taxes collected by the central government. Tamil Nadu's share has been getting smaller. Here is why that is not fair:
The 14th Finance Commission said states should get **42%** of central taxes. But they actually received only **40.3%**.
The 15th Finance Commission said states should get **41%**. But they actually received only **38.1%**.
The central government collects extra taxes called 'cess' and 'surcharges' (like the fuel cess). By law, states do NOT get a share of these. This is money that was supposed to be shared but isn't.
Because of this, all Indian states together lost approximately **₹5.6 lakh crore** that they should have received. The total unshared cess and surcharge money is between **₹36 lakh crore and ₹40 lakh crore**.
**Extra Loss for Tamil Nadu:** Since the 9th Finance Commission, Tamil Nadu's share in central tax distribution has fallen from **7.9%** to just **4.079%**. This has cost Tamil Nadu approximately **₹3.17 lakh crore** — about one-third of the state's entire outstanding debt.
In the 16th Finance Commission, Kerala got a 23.74% increase in its share. Karnataka got 13.27%. Tamil Nadu got only **0.44%** — the **lowest increase** among comparable states.
Why does Tamil Nadu get less?
The formula used by Finance Commissions rewards states with high population growth and low income. Tamil Nadu has **controlled its population well** and has **higher income per person** — and gets penalized for doing the right things.
The Non-Tax Revenue: A Missed Opportunity
The government also earns money from other sources — like charging fees, selling minerals, running government hospitals, renting government land. This is called 'Non-Tax Revenue.'
The government is earning more from non-tax sources, but it is still leaving a LOT of money on the table. Land, government properties, tourism spots, and minerals are not being used to their full earning potential.