CHENNAI: The interim budget presented by Finance Minister Thangam Thennarasu painted a worrying picture on Tamil Nadu’s fiscal situation, with the revenue deficit getting revised sharply upwards for the current year from Rs 41,635 crore (1.17% of GSDP) as projected in the 2025-26 budget to a revised estimate of Rs 69,219 crore (1.94% of GSDP), an increase of Rs 27,584 crore.
Similarly, the fiscal deficit was revised from 2025-26 budget estimate of Rs 1,06,963 crore (3% of GSDP) toRs 1,24,007 crore (3.48% of GSDP) in the revised estimate for the current year, which is an increase of Rs 17,044 crore.
The finance minister, in his speech, blamed the union government for the increase in the financial burden, enlisting a number of reasons (please refer table). He said, “Severe fiscal stress has been caused by the actions of the union government which have a destabilising impact on the state finances.” He, however, said that Chief Minister M K Stalin has ensured that every promise made to the people was fulfilled.
The revised estimates presented by the minister showed that Tamil Nadu could not achieve the the State’s Own Tax Revenue (SOTR) it had projected in 2025-26 business estimates, which was Rs 2,20,895 crore. This has been reduced to Rs 2,06,540 crore in the revised estimate for the current year, the minister said.
For this drop as well, the minister blamed the union government, stating that it was mainly due to the decrease in GST collections following the GST rate rationalisation that came into force last year.
The minister pointed out earlier in the speech that the state spent an additional cumulative amount of Rs10,849 crore for providing Rs 3,000 per family during Pongal and “disbursement of a one-time special assistance of Rs 5,000 to every Kalaignar Mahalir Urimai Thittam”, which were not accounted for in the 2025-26 budget estimates.
He, however, emphasised that despite such additional expenditure, it limited the overall increase in expenditure to Rs 5,713 crore “on account of savings in non-development expenditure”. He said the total revenue expenditure for 2025-26 has been revised to Rs 3,78,917 crore, compared to the budget estimate of Rs 3,73,204 crore. The minister indicated that the increase in the financial burden was primarily due to shortfall in receipts and not due to increase in expenditure.
While the interim budget underscored the government’s discipline in containing the expenditure to an increase of just `5,713 crore, it also showed that the government revised the capital expenditure sharply downwards by nearly `6,000 crore from the `57,231 crore projected in 2025-26 to `51,443 crore in the current year.
As per the interim budget, the outstanding debt went up in the revised estimates to `9.42 lakh crore from (26.43% of GSDP) `9.3 lakh crore in the 2025-26 budget estimates (26.07% of GSDP).