Tamil Nadu presents Rs 2.55 lakh crore Interim Budget ahead of April 2026 polls

Tamil Nadu Finance Minister Thangam Thenarasu on Tuesday presented a Rs 2.55 lakh crore Interim Budget for 2026-27 for the poll-bound state, allocating Rs 4,000 crore for the DMK’s flagship free bus travel scheme for women.

The assembly election is due in April 2026 in Tamil Nadu, and it is expected that the polls will be held that month.

Out of the total sectoral allocation of Rs 2,55,391 crore, Rs 57,039 crore has been earmarked for education, Rs 35,773 crore for urban development and Rs 22,090 crore for the health department. For social security schemes, a total allocation of Rs 5,463 crore has been made. Overall, Rs 13,062 crore has been allocated to the Transport Department in the Interim Budget Estimates.

“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.”

To enhance operational efficiency, service delivery and the financial position of transport corporations, a Viability Gap Fund has been created with a corpus of Rs 2,000 crore to provide performance-based incentives.

In the Interim Budget 2026-27, revenue receipts have been projected at Rs 3,44,575 crore. The state’s own revenues constitute 74.67 per cent of the total revenue receipts, while the remaining 25.33 per cent comes from the share in Central taxes and grants-in-aid from the Union government.

Total Revenue Expenditure has been estimated at Rs 3,93,272 crore, showing a growth of 3.79 per cent over Revised Estimates 2025-26. The Revenue Deficit for 2026-27 is estimated at Rs 48,696.32 crore. The Fiscal Deficit as a percentage of GSDP is estimated at 3.00 per cent in the Interim Budget Estimates 2026-27.

The minister said the overall outstanding debt of the state is estimated at Rs 9,52,374 crore in the Revised Estimates 2025-26 as against Rs 9,29,959 crore in the Budget Estimates 2025-26. 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 as on 31st March 2027 to Rs 10,71,770.34 crore. He said the figures reflected the government’s commitment to fiscal consolidation despite challenges on the economy and fiscal fronts.

In his address, he alleged that the Union government appeared to leave no stone unturned to artificially precipitate a fiscal crisis in Tamil Nadu. He said that in a federal polity there were several instances in the past where states had been unfairly treated by the Union government.

“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.

On the 16th Finance Commission’s report, he said it has been a great disappointment to Tamil Nadu. “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.”

The construction works for the second phase of the Chennai Metro Rail Limited project, covering 118.9 km across three corridors at an estimated cost of Rs 63,246 crore, is progressing rapidly. Regulatory clearances from the Railway Board for commissioning the first stage of phase-II metro project and the metro rail corridor from Poonamallee bypass to Porur, which will be integrated with the existing metro line at Vadapalani, are expected soon. This 14.6 km stretch, comprising 11 metro stations, is expected to be opened for public use shortly.

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

Despite what he described as denial of funds and withholding of welfare schemes by the Union government, the state continued to achieve milestones, 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 Interim Budget speech lasted nearly two hours and 30 minutes and is considered among the lengthiest addresses.