TN GSDP since FY12: Services sector grows most, manufacturing is 2nd

Hit hard by demonetisation, GST and the pandemic, MSMEs record maximum decline in the state, says data released by RBI; agriculture sees a dip of 0.6%

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In Tamil Nadu, the services sector contributes 53.9% of the GSDP. Representational image

Tamil Nadu’s sector-wise contribution towards Gross State Domestic Product (GSDP) has been more or less stagnant in the last 10 years, reveals the data released by the Reserve Bank of India.

In Tamil Nadu, the services sector contributes 53.9% of the GSDP, followed by manufacturing (20.2%), other industries (13%) and agriculture (12.9%). In the last 10 years, the services sector has recorded the maximum change with 2.9% growth, followed by manufacturing (0.1%).

Agriculture records decline

Agriculture has seen a decline of 0.6% and other industries have seen a negative growth of 2.5%. In other states, the services sector contributes 65.9% of Karnataka’s GSDP and in Maharashtra this sector contributes 59.3% of its GSDP.


“Tamil Nadu saw a number of automobile companies setting up their units within the state and mostly in and around Chennai. That is why the share of manufacturing industries has been around 20%. Due to lower growth in the economy not many new companies were ready to set up units and the Covid lockdowns since 2020 March has also affected the manufacturing industries growth,” said an additional chief secretary.

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Agriculture growth has declined as there were a few years when the rainfall was less and the Cauvery was dry. “In the last 10 years, we have had drought years and farmers in the delta districts lost both Kuruvai as well as Samba session as water was not released in Cauvery by Karnataka. There was also loss due to heavy rainfall following a cyclone crossing the delta districts. Due to all these reasons, the agriculture growth has been less,” said the official.

MSMEs hit hard 

Other industries, mainly Micro, Small and Medium Enterprises (MSME) companies, have seen the maximum growth decline in the state. “Tamil Nadu has the maximum number of MSMEs and this section of the economy has been hit very badly due to the 2016 demonetisation. Many MSMEs had to close as they could not do business without cash. After demonetisation came the GST in 2017 and many MSME faced losses as they came under GST regime,” said the official.

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Above all, the 2020 lockdown due to Covid hit the MSMEs very badly and many lost employment due to the closure of factories and even owners of small factories started to work in various offices or big industries, he said.

Services sector has been big for the state economy. It has been growing though the growth rate is much less compared to other states like Karnataka, in which the sector contributed 65.9% of its GSDP. Gujarat’s GSDP gets its maximum share from manufacturing and service sectors —34% and 37%, respectively.