Senior Congress leader and former Union Finance Minister P. Chidambaram on Thursday said that assessing the economic condition of a state only on the basis of its total debt is fundamentally wrong as it ignores macroeconomic realities.
In a statement issued along with New Year greetings, Chidambaram said the increase in public debt is a global trend and should not be used to selectively criticize states like Tamil Nadu.
He said that even in developed economies like America, Britain, Japan, France and Canada, total public debt is increasing every year.
Chidambaram said, “The situation is similar in India also. The total debt of the country and the combined debt of all the states increases every year. This in itself is not unusual.”
According to the former Finance Minister, the true measure of the financial health of a state is not the total amount of debt, but the ratio of debt to gross domestic product (GDP).
“That is an acceptable and meaningful parameter,” he said, adding that Tamil Nadu’s debt-to-GSDP ratio remains stable from 2021-22 to 2025-26.
Chidambaram further said that as per financial projections, the state’s fiscal deficit is continuously declining and Tamil Nadu is expected to achieve NITI Aayog’s target of three per cent by 2025-26.
“This is a commendable achievement and reflects responsible financial management,” he said.
Although he also acknowledged that there is always room for improvement in financial administration, he termed comparison of Tamil Nadu with Uttar Pradesh as misleading and unfair. He said that the economic structure, revenue base and direction of development of the two states are different.
This comment of Chidambaram comes after the statement of Congress leader and data analyst Praveen Chakraborty, in which he compared the increasing debt of Tamil Nadu with that of Uttar Pradesh. This drew a sharp reaction from the DMK, following which Chidambaram intervened to clarify the party’s stand and reduce tensions within the India alliance.
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