Chennai, Jan 1 (IANS) Senior Congress leader and former Union Finance Minister P. Chidambaram on Thursday asserted that assessing a state’s financial health solely on the basis of its total debt is fundamentally flawed, as such comparisons ignore broader economic realities.
In a statement where he extended New Year greetings, Chidambaram said that rising public debt is a global phenomenon and should not be selectively used to criticise individual states like Tamil Nadu.
Developed economies such as the United States, the United Kingdom, Japan, France, and Canada continue to witness an annual increase in their overall public debt, he noted.
“The same trend is visible in India as well. Both the country’s total debt and the combined debt of all states rise every year. This, by itself, is not abnormal,” he said.
According to the former Union Finance Minister, the correct indicator for assessing financial health is not the absolute quantum of debt, but the ratio of debt to Gross Domestic Product (GDP).
“That is the accepted and meaningful yardstick,” he said, adding that Tamil Nadu’s debt-to-GSDP ratio has remained stable from 2021–22 through 2025–26.
Chidambaram further noted that fiscal projections indicate a steady reduction in the state’s fiscal deficit, with Tamil Nadu expected to meet the National Institution for Transforming India (NITI Aayog) target of limiting the deficit to three per cent by 2025–26.
“This is a commendable achievement and reflects responsible fiscal management,” he said.
While acknowledging that there is always scope for improvement in financial governance, he strongly opposed comparisons between Tamil Nadu and Uttar Pradesh, calling them misleading and inappropriate given the differing economic structures, revenue bases and development trajectories of the two states.
His remarks came against the backdrop of political controversy triggered by comments made earlier by Congress leader and data analyst Praveen Chakravarty, who had criticised Tamil Nadu’s rising debt levels in comparison to Uttar Pradesh. The remarks drew sharp reactions from the DMK, prompting Chidambaram’s intervention to clarify the party’s position and ease tensions within the INDIA bloc.
Chidambaram’s statement is being viewed as an attempt to reaffirm confidence in Tamil Nadu’s fiscal management while also maintaining unity within the opposition alliance ahead of crucial political developments.
–IANS
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