Tamil Nadu Finance Minister Thangam Thenarasu on Friday presented the 2025-26 state Budget in the Assembly, unveiling a series of schemes, including the construction of one lakh new houses under the Kalaignar Kanavu Illam housing scheme.
The Budget also made significant allocations for the state's flagship welfare initiatives for women, such as the fare-free bus travel scheme and the 'Kalaignar Magalir Urimai Thogai Thittam.'
Thenarasu accused the Union government of withholding Rs 2,152 crore in funds due to Tamil Nadu’s refusal to implement the three-language policy, further escalating tensions between the state and Centre.
Despite this, the finance minister asserted that the state will continue to uphold its bilingual policy, even if it means bearing the financial burden. He assured that the government will cover the costs to ensure uninterrupted funding for teachers' salaries and other educational expenses.
The announcement comes amid an ongoing dispute between the Union and state governments over the National Education Policy (NEP), following Union Education Minister Dharmendra Pradhan’s remarks that funds "will be withheld until Tamil Nadu accepts" the policy.
Noisy scenes were witnessed in the Assembly as the main opposition AIADMK walked out after attempting to raise alleged graft in state-run liquor corporation TASMAC as the Enforcement Directorate has held searches related to the state-owned company.
Key announcements from the Budget:
Transportation and infrastructure
Regarding public transportation, Thenarasu announced a Rs 3,600 crore subsidy for the 'Vidiyal' bus travel scheme for women. Under this fare-free scheme, an average of 50 lakh women use the service daily, with a woman beneficiary saving an average of Rs 888 per month. The minister said the percentage of women using the service has risen from 40% to 65%.
He also announced the introduction of 1,125 electric buses across Tamil Nadu, with Chennai receiving 950, Madurai 100, and Coimbatore 75.
Tamil Nadu will explore the possibility of setting up a Regional Rapid Transit System (RRTS), modeled after the Semi High-Speed Railway (SHR) between New Delhi and Meerut, Thennarasu announced.
The government has allocated significant funds for metro rail expansion projects, including Rs 9,335 crore for the Airport-Kilambakkam corridor, Rs 9,744 crore for the Koyambedu-Pattabiram route, and Rs 8,779 crore for the Poonamallee-Sriperumbudur stretch. Additionally, Rs 2,200 crore has been set aside for the Chief Minister’s Rural Roads Development Scheme.
Housing and urban development
The finance minister announed a sum of Rs 3,500 crore for one lakh new houses under the "Kalaignar Kanavu Illam housing scheme", with an additional Rs 600 crore earmarked to build 25,000 new houses for the poor whose existing homes are beyond repair.
Chennai will also see the development of 'sponge parks' with an allocation of Rs 88 crore to manage urban flooding and help with grounwater recharge.
A new world-class city is planned near Chennai, while combined drinking water schemes in seven districts will be implemented at a cost of Rs 6,668 crore. A new reservoir covering 3,010 acres will be developed in the Kovalam sub-basin at a cost of Rs 350 crore.
Industrial development and employment
Thennarasu announced plans to boost industrial development across Tamil Nadu. Two new footwear parks will be set up—one in Melur, Madurai district, and another in Cuddalore—each generating 10,000 jobs with a total investment of Rs 250 crore. Additionally, SIPCOT will establish a dedicated footwear skill training facility in Kallakurichi.
A dedicated industrial park for the engineering and fabrication industry will be developed in Trichy district, covering 250 acres and creating 5,000 jobs in the central region.
In Thoothukudi, a Man-Made Fibers (MMF) and Technical Textiles Industrial Park will be established, complementing the district’s existing green hydrogen and automobile investments. New industrial parks will also be developed in Cuddalore (500 acres) and Pudukottai (200 acres).
To further strengthen these sectors, TIDCO will establish a Centre of Excellence for advanced pump motor manufacturing and a Centre of Excellence for foundry in Coimbatore, in collaboration with private industry and associations. Additionally, a new TIDEL Park will be set up in Hosur at a cost of Rs 400 crore to expand IT infrastructure.
Technology and semiconductor sector
The finance minister announced the launch of the ‘Tamil Nadu Semiconductor Mission-2030,’ a five-year initiative with an estimated allocation of Rs 500 crore.
As part of this mission, a ‘Semiconductor Fabless Lab’ will be set up in Chennai at an estimated cost of Rs 100 crore in collaboration with leading industry and academic institutions. The initiative aims to attract world-class semiconductor design companies and domestic start-ups to establish their design centres in Tamil Nadu.
To drive industrial transformation in Coimbatore, semiconductor manufacturing parks will be established in Sulur and near Palladam, each spanning 100 acres. These parks will be developed in collaboration with companies from the United States, Singapore, Malaysia, and Taiwan, boosting the region’s economic growth.
Additionally, a ‘Hosur Knowledge Corridor’ will be developed with world-class infrastructure to support Global Capability Centres (GCCs) and R&D hubs of leading IT firms, similar to Chennai’s Old Mamallapuram Road (OMR) IT corridor.
Education
Thennarasu highlighted Anna University’s legacy as a premier educational institution in India over the past 47 years. To further elevate its standing, the government will draft a comprehensive roadmap to position Anna University among the top 10 institutions in India and secure a place in the top 150 of the global QS rankings within the next five years.
Further, the minister said that under the 'Samagra Shiksha' scheme, the state government has been successfully implementing various student welfare schemes for the past seven years.
"Notably, initiatives such as the 'Ennum Ezhuthum Thittam' to ensure foundational literacy, special education for differently-abled children, transport allowances for students from remote areas, salary for teachers, guidance for higher education to shape students' future, art festivals to nurture unique talents, educational tours and infrastructure development, including internet facilities in schools, are in progress.
A major point of contention in the Budget was the Union government’s decision to withhold Rs 2,152 crore due to Tamil Nadu over its refusal to adopt the Centre’s NEP, which includes a three-language formula.
"Despite this, keeping in mind the welfare of students, the state government has allocated funds, including salaries of teachers, from its own resources to ensure that the education of government school students remains unaffected, even in the slightest way," he said.
"Even at this critical juncture, the people of Tamil Nadu have wholeheartedly rallied behind the chief minister for upholding the dignity of the State by standing firm on the bilingual policy, even at the cost of foregoing two thousand crore rupees," the minister said.
Women and social welfare schemes
On the "Kalaignar Magalir Urimai Thittam" of Rs 1,000 monthly assistance for 1.15 crore women, he said Rs 13,807 crore has been allocated and announced that women, who are eligible but have not yet received Rs 1,000 assistance, will soon get opportunity to apply.
He announced 10 more 'Thozhi' working women's hostels at a cost of Rs 77 crore, adding to the 13 such hostels already operational.
Additionally, new hostels for girl students will be constructed in Chennai, Coimbatore, and Madurai at a cost of Rs 275 crore.
The Budget includes Rs 600 crore for the Chief Minister’s Breakfast Scheme. Similarly, a Rs 20,000 grant has also been allocated for 2,000 gig workers to purchase two-wheelers.
Energy and environmental initiatives
The state will set up new hydel power stations in Vellimalai (1,100MW) and Azhiyaru (1,800MW) with a combined investment of Rs 11,721 crore.
Additionally, energy storage systems with a capacity of 4,000MW will be established. The government has also allocated Rs 70 crore to convert diesel-driven buses into LPG-driven vehicles.
Seven biodiversity parks will be set up in Chennai with an allocation of Rs 88 crore. A trust for marine resources will be formed at a cost of Rs 50 crore, while a research centre for hunting birds will be set up at Rs 1 crore.
Aviation and maritime development
The finance minister announced that work has been expedited regarding the new airport at Parandur near Chennai. Additionally, a new airport will be developed in the Rameswaram area of Ramanathapuram district.
The government will introduce the ‘Tamil Nadu Maritime Transport Manufacturing Policy 2025’ to promote investment and innovation in ship and boat design, ship hull fabrication, and ship engine production.
This initiative is expected to generate 30,000 jobs in districts such as Cuddalore and Thoothukudi while fostering growth in the micro, small, and medium enterprises sector.
Thennarasu also announced several key initiatives, including a Rs 1 crore prize for the World Tamil Olympiad and the translation of Thirukkural into 45 more languages, bringing its total to 93 languages recognised by the United Nations.
The Budget includes a Rs 10 crore fund for space technology and plans to establish Mudhaval Padaippagam in all municipal corporations, each at a cost of Rs 5 crore.
