The Tamil Nadu budget comes across as balanced. The fresh numbers suggest the state has managed to curtail fiscal deficit and enhance capital expenditure, although not significantly. The ruling DMK that believes in economic parity and social justice has continued with its welfare measures, sticking to the theme of ‘everything for everyone’, but refrained from any big-bang announcements ahead of the 2026 Assembly elections despite it being the government’s last full budget. The only deviation is the scheme to provide 20 lakh college students with a tablet or laptop over the next two years.
The FM’s renewed confidence stems from a 14.6% projected growth in the state’s tax revenue (SOTR) at ₹2,20,895 crore, thanks to a revision in taxes and efficiency in collections and the Centre’s nod to fund phase two of Chennai’s metro rail project. The bleeding electricity distribution company, a traditional drag on the exchequer, has reported improved revenues due to tariff hikes. The state’s capital expenditure is projected at ₹57,231 crore, an increase of 22.4%. A steady hike in the proportion of capex to net borrowings signifies TN’s eagerness to create new assets. On the flip side, FM’s promise to cut the fiscal deficit to 3% steeply from 3.26% last fiscal, as mandated by the Centre, may require special attention.
Amidst the ongoing fight against Hindi imposition and the three-language policy, TN has decided to showcase its culture and heritage to the world. FM has made many announcements, including new archaeological excavations in eight locations, setting up the Indus Valley Cultural Gallery in Chennai, Agaram---Museum of Languages in Madurai, and the annual World Tamil Olympiad competition. There were other declarations, too, including a Semiconductor Mission-2030 and industrial parks in Tiruchy, Madurai, Pudukkottai, Cuddalore, and Thanjavur districts to tackle intra-state disparities, and a Knowledge Corridor in Hosur. With many state-run universities in deep financial crisis, the block grant to them stands enhanced to ₹700 crore. Debt may not necessarily be bad, but too much debt can strain the state exchequer. Some state governments have focused on slashing their debt burden. For instance, Maharashtra and Gujarat, two other industrialised states, have slashed their debt to GSDP ratio way below TN’s 26%. Given its enormous size of ₹9,29,959 crore, Tamil Nadu should seek ways to tackle its debt pile.