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TN tables interim budget, slams Centre for withholding funds
Tamil Nadu's finance minister presented a ₹2.55 lakh crore interim budget for 2026-27, focusing on flagship schemes ahead of elections, while criticizing the Centre.
Tamil Nadu finance minister Thangam Thenarasu on Tuesday presented a ₹2.55 lakh crore interim budget for 2026-27 in the state assembly, making allocations towards all flagship schemes of the DMK government ahead of the crucial assembly polls due in April-May this year. The government allocated ₹4,000 crore for the Vidiyal Payanam scheme (free bus travel scheme for women beneficiaries).
In the interim budget estimates 2026-27, the total revenue expenditure has been pegged at ₹3,93,272 crore, a 3.79% jump over the revised estimates 2025-26. The overall capital expenditure in the revised estimates is projected at ₹51,443 crore, down from ₹57,231 crore in budget estimates for the ongoing financial year.
While the revenue deficit in the interim budget estimates for 2026-27 is estimated at ₹48,696.32 crore, the finance minister said the fiscal deficit as a percentage of GSDP is estimated to be 3%. The government plans to borrow a total amount of ₹1,79,809.65 crore during 2026-27 and make repayment of ₹60,413.42 crore. As a result, the outstanding borrowing by the end of the next financial year will be ₹10,71,770.34 crore.
In his 142-minute interim budget speech, Thenarasu accused the Union government of unfair treatment to the southern state, including withholding of central funds.
In a federal polity, the minister said, there were several instances in the past where states had been unfairly treated by the Centre.
“However, I firmly believe that the extent of challenges faced by this government is unprecedented. In every field, be it denial of sanction of major infrastructure projects for Tamil Nadu, withholding of release of funds for centrally sponsored schemes, curtailment of tax revenues without due consultation, or unfair imposition of conditions to mandate expenditure, the union government appears to leave no stone unturned to artificially precipitate a fiscal crisis in Tamil Nadu,” he added.
The interim budget earmarked a maximum of ₹57,039 crore for education, including ₹48,534 crore for the school education department, ₹35,773 crore for urban development and ₹22,090 crore for the health department. Overall, ₹13,062 crore has been allocated to the transport department. For social security schemes, the state made a total allocation of ₹5,463 crore for over 3.53 million beneficiaries.
On the 16th Finance Commission’s report tabled recently in Parliament, the minister 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%. 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 said.
Since the 9th Finance Commission, when the state’s share was 7.9%, successive finance commissions had reduced it to 4%, leading to a loss of ₹3.17 lakh crore owr approximately 33% of the state’s outstanding debt, he added.
“While our neighbouring states Kerala and Karnataka have been given a growth of 23.7% and 13.2% respectively, Tamil Nadu has been given a marginal increase of 0.44%, which is lowest among comparable states,” the minister said, adding that the state sought equality, not generosity.
Meanwhile, All India Anna Dravida Munnetra Kazhagam (AIADMK) chief Edappadi K Palaniswami said that the budget “lacked substance.” “Like previous years, this year’s Interim Financial Statement was also nothing more than a polished speech filled with wordplay, without any substantial content,” he said.
Palaniswami also criticised the state government for the rising fiscal deficit, adding that there has been a ₹16,000 crore rise, pegging the deficit to ₹1.24 lakh crore from the projected ₹1.08 lakh crore. “In the 2026-27 Interim Budget, the fiscal deficit is stated to be ₹1.22 lakh crore, and in the revised estimates, it is certain to increase further. If the fiscal deficit continues to rise in this manner, the burden of taxation and borrowing on the people will increase. This is not conducive to the State’s development,” he said.
Tamil Nadu BJP leader Narayanan Thirupathy termed the interim budget as “the DMK’s last deceptive self-promotion interim budget,” saying it was focused entirely on criticising the BJP-led Centre, but failed to hide the failures of their so-called “Dravidian Model” governance.
