Tamil Nadu's economy to reach $2.6 tn by 2047-48

Tamil Nadu's nominal Gross State Domestic Product (GSDP) is projected to expand to about $2.6 trillion by 2047-48, from $294 billion last fiscal, but the state will need to allot capital expenditure of $111 billion to realise this potential growth, according to a report by CREDAI and Knight Frank. 

"Tamil Nadu stands as the second-largest state economy in India, contributing 8.8% to the nation's GDP. In FY 2023, the state GDP is estimated to have expanded to $294 billion.

"Over the 10-year period before the onset of the COVID-19 pandemic (FY 2009-2019), Tamil Nadu's economy experienced an average annual growth rate of 11%," the report said.

At this pace of growth, Tamil Nadu's Gross State Domestic Product (GSDP) is likely to expand to $2.6 trillion by 2047-48, it added. "Currently, the state government of Tamil Nadu has been allocating 4.8% of its GSDP towards the Capital expenditure (capex), which largely includes allocation towards infrastructure development in the state.

"To achieve its projected economic growth of $2.6 trillion by FY 2047-48, it is essential to enhance the allocation for capital expenditure (CapEx) to 5.7% of the GSDP. Over the cumulative period spanning from FY 2025-48, the state should undertake a total CapEx of $111 billion," the report said.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said Tamil Nadu has consistently stood out as one of the most economically advanced states in India, making substantial contributions to the national GDP. Its economic structure is well-balanced across primary, secondary, and tertiary sectors, fostering stable growth.

"To realise this growth potential, the state must strategically invest in industrialisation and urbanisation. This investment will facilitate the envisioned economic growth across sectors including real estate," he said. Agriculture, services, manufacturing, and others play crucial roles in driving the state's economic prosperity. Presently, the services sector stands out as the primary catalyst, contributing 53% to the overall economic growth of Tamil Nadu.

As of 2022-23, the size of Tamil Nadu's construction sector is estimated to be $32 billion, contributing 11% to the state's overall economy. Projected at the current growth rate, this sector is poised to expand to $208 billion by FY 2047-48. The manufacturing sector, which accounts for 19% of the state's economy, is expected to expand to $374 billion by FY 2048.