Tamil Nadu Presents Rs 2.55 Lakh Crore Interim Budget

Thangam Thenarasu on Tuesday presented a Rs 2.55 lakh crore interim budget for 2026–27 in poll-bound Tamil Nadu, earmarking Rs 4,000 crore for the DMK government’s flagship free bus travel scheme for women.

In the Interim Budget 2026–27, revenue receipts are projected at Rs 3,44,575 crore, of which 74.67 per cent will come from the state’s own revenues, while 25.33 per cent is expected from the share of Central taxes and Union grants-in-aid. Total Revenue Expenditure is estimated at Rs 3,93,272 crore, marking a 3.79 per cent increase over the Revised Estimates for 2025–26.

The Fiscal Deficit is pegged at 3.00 per cent of GSDP for 2026–27. The overall outstanding debt is estimated at Rs 9,52,374 crore in the Revised Estimates 2025–26, compared to Rs 9,29,959 crore in the Budget Estimates 2025–26. The Revenue Deficit for 2026–27 is projected at Rs 48,696.32 crore. The government plans to borrow Rs 1,79,809.65 crore during 2026–27 and repay Rs 60,413.42 crore, taking the outstanding borrowing to Rs 10,71,770.34 crore by March 31, 2027.

The minister said the budget reflects a commitment to fiscal consolidation despite economic challenges, while alleging that the Union government was attempting to create financial stress for the state. He said in a federal polity, there have been several instances of states being treated unfairly by the Centre.

He further said, "However, I firmly believe that the extent of challenges faced by this government is unprecedented. " In every field, be it denial of sanction for major infrastructure projects for Tamil Nadu, withholding of release of funds for centrally sponsored schemes, curtailment of tax revenues, or unfair imposition of conditions, the union government appears to leave no stone unturned to artificially precipitate a fiscal crisis in Tamil Nadu, he alleged.

For social security schemes, an allocation of Rs 5,463 crore has been made. To improve the operational efficiency and financial health of transport corporations, a Viability Gap Fund with a corpus of Rs 2,000 crore has been created to offer performance-based incentives.

"In this Interim Budget Estimates, an allocation of Rs 4,000 crore has been made for the Vidiyal Payanam scheme (free bus travel scheme for women beneficiaries), Rs 1,782 crore towards the student bus fare scheme, and Rs 1,857 crore for diesel subsidy." A total of Rs 13,062 crore has been allocated to the Transport Department.

On the Sixteenth Finance Commission report, the minister termed its recommendations disappointing for the state. "Even when all States had unequivocally sought a higher share in the divisible pool of central taxes, the 16th FC has recommended retaining the share at 41 per cent. It is disappointing to see that our serious concern towards the increasing levy of cesses and surcharges has not found place in the Commission’s recommendations."

He also highlighted the progress of Phase II of the Chennai Metro Rail Limited project, spanning 118.9 km across three corridors at an estimated cost of Rs 63,246 crore. Regulatory clearances from the Railway Board are expected soon for commissioning a 14.6 km stretch from Poonamallee bypass to Porur, integrated with the existing line at Vadapalani.

"The government of Tamil Nadu is continuously urging the Union government to reconsider this decision and to accord approval for the Metro Rail projects in Coimbatore and Madurai Metro, as has been done for other similarly placed cities in the country," he said.

Despite what he described as step-motherly treatment by the Union government, including denial of funds and withholding of welfare schemes, the state has continued to record strong economic performance, he claimed.

"In the present economic context, Tamil Nadu’s growth rate exceeds that of the national GDP, which is an encouraging development. This relative advantage is anticipated to persist in the forthcoming year," the minister added.

The nearly two-and-a-half-hour Interim Budget speech is among the lengthiest delivered in the Assembly. Assembly elections in Tamil Nadu are due in April 2026.