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Synopsis The Planning Commission has decided to prepare State Development Reports (SDRs) for all States and Union Territories of the country. The purpose for bringing out these reports is to provide credible independent quality reference documents on the development profile of the States. The SDRs aim at spelling out the constraints and progress and prosperity. Each SDR is being prepared with the assistance of reputed national level-agencies under the supervision of a Core Group, headed by a Member of the Planning Commission as Chairman and a representative of the concerned State government as a member. So far the SDRs for Assam, Himachal Pradesh, Jammu and Kashmir, Orissa and Punjab have been released. The Tamil Nadu Development Report highlights that the State economy is now driven largely by industry and services, with agriculture accounting for less than 20 per cent of State Domestic Product. However, traditional sectors like agriculture and small industries cannot be neglected since they provide employment opportunities to a large number of population. Diversification of the rural economy to horticulture, dairy, fisheries, poultry and agro-processing has provided employment opportunities and reduced poverty. The high level of urbanization f the State requires massive investment in all the infrastructure areas-power, roads, ports, water supply and sewerage, and telecom. Reforms in these sectors, including publicprivate partnership are needed for future growth of the economy. The service sector, particularly Information Technology Services, Financial Services and Tourism have immense potential in Tamil Nadu. While power is no longer a serious constraint, the scarce water resources of the State limit the growth of the economy in many areas. The finances of Tamil Nadu are better managed than most other States. The State is no longer on the verge of serious financial crisis, but still requires to take several reform measures including the implementation of the Value Added Tax. While the State is known for comparatively good administration, there is need for greater transparency and accountability. Local government institutions which are closer to the people need to be strengthened. The Tamil Nadu Development Report lays out the past achievements as well as potential in various sectors of the State economy. The report also suggests policies and strategies that should be followed for future development of the State.