As far as my understanding permits, inter-turn fault develops into an earth fault by two mechanisms.
1. Inter-turn fault results in circulating currents among the short circuited turns. This results in higher I2R losses, which deteriorates the winding insulation. If the short circuited turns happen to be close to the core, an earth fault may arise from the turns to the core.
2. If the short circuit is not attended to for a long time, the temperature raise deteriorates the dielectric strength of oil by formation of sludge, which over a long time result into an earth fault.
Does anyone have other suggestions about the possibilities of an inter-turn faults developing into an earth fault? These will be highly appreciated.
If the turn-to-turn fault is a metallic fault, the main fault evolution mechanisms are those you described.
Another possibility, in high voltage transformers, is that the turn to turn fault could be an arc between adjacent turns. The arc evolution could thus involve other turns due to arc elongation and thus reach earthed parts of the transformer, causing a phase to ground fault.
Inter-turn short within transformer alone is damaging. Large current as well as arc within the turns shorted generate lot of heat to create hot spot sufficient to burn the surrounding insulating materials causing carbonisation of hydrocarbon based insulation and generation of water molecules. This deteriorate the insulation grossly. If the inter-turn shorting is formed near the core or core frame this fault quickly proceed to earth fault particularly in case of high voltage transformers but if this fault is developed deep within the winding layers it takes a longer time to develop a earth fault from a persisting inter-turn fault.
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