CHENNAI: Although the interim budget presented by Finance Minister Thangam Thennarasu showed escalating stress on Tamil Nadu’s finances, he projected an optimistic outlook for financial year 2026-27 that will see a new government in Tamil Nadu after the Assembly elections.
According to the projections, the state’s GSDP is expected to grow by 13% (in terms of current prices) from Rs 35.98 lakh crore in the current year (2025-26) to Rs 40.67 lakh crore in 2026-27.
Though the fiscal deficit in the current year has been estimated to be 3.48% of the GSDP, the minister said it is expecting the figure to be at 3% of GSDP in 2026-27.
Similarly, the revenue deficit is expected to come down sharply to Rs 48,696 crore in 2026-27 from Rs 69,219 crore in the current year to remain at the level 1.2% of GSDP.
The government’s optimism of bringing down the fiscal deficit and revenue deficit significantly stemmed from its increased revenue projections, both in its own tax and non-tax revenue and the share in central taxes.
The minister predicted the SOTR to grow from Rs 2.07 lakh crore in current year to Rs 2.3 lakh crore in 2026-27, while the non-tax revenue is estimated to be Rs 27,703 crore in 2026-27.
Despite expressing strong concerns over unfair treatment meted out to the state in the 16th Finance Commission recommendations, the interim budget projected the share in central taxes at Rs 62,530.65 crore in 2026-27, compared to Rs 56,819.23 crore in the current year, based on the estimates provided in the recently presented Union Budget.
Anticipating the union government to release the funds due under various schemes, including Samagra Shiksha, the interim budget estimated the grants-in-aid from union government to be Rs 24,761.66 crore.
“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. By undertaking measures such as enhancing resources and improving the efficiency of revenue collection, the state will strive to sustain healthy growth in revenue receipts,” the minister said in his speech.
