Journal of African Development

One of India's most industrialized states is Tamil Nadu. In recent years there was fiscal deterioration The sustainability of Tamil Nadu's debt is examined in this study.

Tamil Nadu has shown stagnant own tax revenue, declining central shares, and rising expenditures on subsidies and interest payments, alongside a decline in capital expenditure. Tamil Nadu’s outstanding liabilities are above 25 percent, which is quite alarmingly high. Empirical studies of debt sustainability reveal contradictory findings: a unit root test on the debt-GDP ratio points to unsustainability, whereas a cointegration test between government revenue and overall expenditures implies sustainability. This research emphasizes the intricate and uncertain aspects of Tamil Nadu's financial condition, stressing the critical requirement for strong revenue generation and careful spending management to guarantee long-term debt viability