Tamil Nadu, on Friday, tabled its state finance budget, which had a strong focus on women empowerment, higher education initiatives, and measures to improve state infrastructure such as transport and drinking water systems.
The Budget pegged the state’s real GSDP growth for FY25 at 9 percent and nominal GSDP growth at 14.5 per cent for FY25.
The state reiterated its commitment to fiscal consolidation and said that fiscal deficit in the revised estimates of FY25 decreased by ₹6,992 crore to reach ₹1,01,698 crore (3.26 per cent of GDP) as against ₹1,08,690 crore budgeted for FY25 (3.44 per cent). The fiscal deficit for FY26 is estimated to be ₹1,06,963 crore (around 3 per cent of GDP)
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The state has ambitious capex plans for FY26 and has budgeted to grow its capex at 22 per cent for FY26 at ₹57,230.96 crore. This is despite the state marginally falling short of its FY25 budgeted estimates. The revised estimate for capex for FY25 is ₹46,766.03 crore as against the originally budgeted level of ₹47,681 crore.
Revenue receipts of the state, including Central Transfers, is budgeted to be ₹3,31,568.76 crore for FY26, a growth of 12.8 per cent from the revised estimates of FY25 at ₹2,93,906.41 crore. Revenue expenditure is budgeted at ₹3,73,203.69 crore in FY26, an increase of 9.65 per cent over the revised estimates of FY25.
The revenue deficit in revised estimates is estimated to decrease to ₹46,467 crore compared to ₹49,279 crore earlier budgeted for FY25 on account of prudent fiscal management. “This has been achieved despite the substantial reduction in grants-in-aid from the Union Government in the current year,” TN finance minister Thangam Thennarasu, said in his budget speech. The revenue deficit for FY26 is estimated to further reduce to ₹41,635 crore at 1.17 per cent of GDP.
The state anticipates to grow its Own Tax Revenue (SOTR) at 14.6 per cent in FY26 from its revised estimates for FY25 which is at ₹1,92,752.43 crore in the revised estimates for FY25. “We have been increasing stamp duty, GST and motor vehicle taxes at a brisk rate but the growth in VAT (fuel and liquor) has been going slow,” TN finance secretary T.Udhayachandran, IAS, said on Friday, speaking to the media persons.
With regards to debt, which has been consistently high for the state, the finance secretary reiterated that it has to be seen from the lens of Debt to GDP ratio.
The outstanding debt to GSDP ratio in the revised estimates of FY25 is estimated to marginally increase to 26.43 percent as compared to 26.41 per cent predicted earlier in budget estimates for FY25. This ratio is expected to decrease to 26.07 percent of the GSDP in FY26.
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Among major decisions, the state also restored with effect from April 1, 2026 the Earned Leave Surrender system for state government employees and teachers, which was suspended during Covid. This move will likely benefit over 9 lakh such employees.
Further, in a push to women empowerment, the registration fee for all immovable assets, including houses, plots and agricultural lands, valued up to₹10 lakh will be reduced by one per cent when registered in the name of women, from April 1, 2025.
20 lakh college students are also set to be provided with a tablet or laptop, based on their preference, over the next two years.
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