Chennai, February 17 – Tamil Nadu Finance Minister Thangam Thenarasu presented an interim budget of ₹2.55 lakh crore for the 2026-27 fiscal, with a focus on the state's upcoming elections. A significant portion, ₹4,000 crore, was allocated to the DMK's flagship scheme of free bus travel for women.
Of the ₹2,55,391 crore allocated across sectors, ₹57,039 crore was earmarked for education, ₹35,773 crore for urban development, and ₹22,090 crore for the health department. Overall, the Transport Department received ₹13,062 crore in the interim budget estimates.
For social security schemes, including old-age and differently-abled pensions, a total of ₹5,463 crore was allocated, benefiting 35.33 lakh beneficiaries.
The main opposition party, AIADMK, criticized the interim budget, calling it "wordplay" and accusing it of misleading the public.
Tamil Nadu BJP leader Narayanan Thirupathy described the budget as "the DMK's last deceptive self-promotion interim budget," arguing that it focused solely on criticizing the BJP-led central government without addressing the failures of the "Dravidian Model" of governance.
The 2026-27 interim budget estimates project a total revenue expenditure of ₹3,93,272 crore, representing a 3.79% growth over the Revised Estimates for 2025-26. Capital expenditure is projected at ₹51,443 crore, compared to ₹57,231 crore in the Budget Estimates for 2025-26. The state's own revenues are estimated at ₹2,57,283 crore, accounting for 74.67% of the total revenue receipts in the 2026-27 interim budget.
Agriculture Minister MRK Panneerselvam announced an allocation of ₹47,248 crore for the agriculture sector. He also stated that two lakh new free electricity connections had been provided to farmers over the past five years.
The finance minister stated that the Fiscal Deficit as a percentage of GSDP is estimated at 3.00% in the 2026-27 interim budget estimates. The state's overall outstanding debt is estimated at ₹9,52,374 crore in the Revised Estimates for 2025-26, compared to ₹9,29,959 crore in the Budget Estimates for 2025-26.
The minister also accused the union government of attempting to artificially create a fiscal crisis in Tamil Nadu. He referred to the 16th Finance Commission's report, stating that it was a source of disappointment for Tamil Nadu.
The minister further stated that, in a federal polity, the state had been unfairly treated by the union government in the past. He added, "However, I firmly believe that the challenges faced by this government are unprecedented."
The minister alleged that the union government has taken measures to artificially create a fiscal crisis in Tamil Nadu, including denying sanction for major infrastructure projects, withholding funds for centrally sponsored schemes, curtailing tax revenues, and imposing unfair conditions.
He also accused the union government of causing severe fiscal stress, which has a destabilizing impact on the state's finances. Explaining the "challenges" faced by the government, he stated that the GST rate rationalisation was approved by the GST Council without considering the apprehensions and opposition raised by several states.
At a time when all state governments are facing increased expenditure commitments, Tamil Nadu is also being denied releases under Centrally Sponsored Schemes that are rightfully due to the state. This includes a ₹3,548 crore withheld by the Union government under the Samagra Shiksha Scheme, a denial of ₹3,112 crore under the Jal Jeevan Mission, and a ₹2,246 crore in Finance Commission grants that have not been released to the state government.
He alleged: "Among states, Tamil Nadu has once again been unfairly treated by the Commission by not giving us our due and legitimate share. Since the 9th Finance Commission, when our share was 7.931%, successive finance commissions have reduced it to 4.079%, leading to a loss of ₹3.17 lakh crore, which is equivalent to approximately 33% of our outstanding debt."
The Revenue Deficit in the Interim Budget Estimates for 2026-27 is estimated at ₹48,696.32 crore. The government plans to borrow a total of ₹1,79,809.65 crore during 2026-27 and make repayments of ₹60,413.42 crore. As a result, the outstanding borrowing as on 31st March 2027 will be ₹10,71,770.34 crore.
The government of Tamil Nadu is continuously urging the Union government to reconsider and grant approval for the Metro Rail projects in Coimbatore and Madurai, as has been done for other similarly placed cities in the country," he said.
The interim budget speech of the minister was 2.23 hours long, making it one of the longest addresses.
The assembly elections are due in April 2026 in Tamil Nadu, and it is expected that the polls will be held that month.
