The debt of Indian states has been on a continuous upward trajectory. Over the past five years, state debt has grown significantly. According to the Reserve Bank of India's (RBI) data, Tamil Nadu has consistently been the leader among Indian states in terms of borrowing, reaching ₹101,025 crore from April 2024 to February 2025.
States secure these loans by issuing bonds, known as State Development Loans, to fulfill expenditure requirements. Once raised, these funds are directed towards state development projects. Let's explore which state follows Tamil Nadu in the debt hierarchy.
States Accumulate ₹41.1 Lakh Crore Debt in 5 Years
From fiscal 2021 to February 2025, all states and union territories acquired ₹41.1 lakh crore through market bonds. Tamil Nadu spearheaded with ₹4.8 lakh crore, constituting about 12% of total debt. Maharashtra followed closely, amassing ₹4.2 lakh crore. Uttar Pradesh, Karnataka, West Bengal, and Andhra Pradesh were also major borrowers. Together, these six states contributed to more than half of the borrowings during this period.
Source: aajtak
Tamil Nadu and Maharashtra Lead the Charge
Tamil Nadu and Maharashtra remained at the forefront throughout fiscal 21 to fiscal 25. Tamil Nadu led every year, climbing from ₹87,900 crore in fiscal 21 to ₹1 lakh crore in fiscal 25. During April to February of fiscal 2025, Karnataka was the third-largest borrower with ₹72,025 crore, followed by Andhra Pradesh with ₹70,057 crore, and Rajasthan with ₹63,565 crore.
The State With the Most Loan Repayment
Between fiscal 2021 and April-September fiscal 2025, Maharashtra repaid ₹1.2 lakh crore in loans, the highest in terms of overall debt repayment. The total loan during this period stood at ₹3.8 lakh crore.
Source: aajtak
Repayment Overview of States
Following Maharashtra, Tamil Nadu repaid ₹1 lakh crore from the borrowed ₹4.2 lakh crore. West Bengal and Rajasthan repaid ₹0.8 lakh crore each, from their total borrowing of ₹2.8 lakh crore and ₹2.6 lakh crore respectively. Besides Maharashtra and Tamil Nadu, Andhra Pradesh, Rajasthan, and West Bengal were other top-paying states in fiscal 24-25. Jharkhand cleared 51.4% of its total debt, followed by Gujarat at 43.1%, and Kerala at 35.8%.
