CHENNAI: If electoral politics is a game of chess, Thangam Thennarasu could well be an aspiring grandmaster. Presenting his last full-fledged budget before the 2026 assembly election, the Tamil Nadu finance minister on Friday moved the welfare and development pieces in tandem to present a growth-oriented budget that sought to be as populist as prudent.
Chennai garnered the bulk of the new infrastructure projects including a new global city in its vicinity, expansion of metro rail network and a sixth water reservoir. Despite increased outlay for infra and welfare programmes and drying up of central funds, Thennarasu sought to keep the finances in the safe zone, aiming to bring down fiscal deficit to 3% (of GSDP) by the end of the fiscal (it was 3.56 in 2021-22). The optimism stems from the experience of 2024-25, when the state reduced revenue expenditure (Rs 3.4 lakh crore) and revenue deficit (Rs 46,467 crore) to contain the fiscal deficit at 3.26%.
For 2025-26, the finance minister has projected revenue receipt of Rs 3.32 lakh crore, revenue expenditure of Rs 3.73 lakh crore, and revenue deficit of Rs 41,635 crore. This brings down the revenue deficit as a percentage to GSDP to 1.17, close to the ratio of 2015-16 before it worsened. Fiscal deficit has been targeted at an ambitious 3% of GSDP.
The budget sought to give something to every segment, more so for women and students, reviving free distribution of laptops to higher secondary school students, and enlarging the number of women family heads who get monthly cash doles.
The offering for students comes when Centre has held back Rs 2,152 crore meant for the state under Samagra Shiksha Abhiyan.
“While state’s own revenues have been increasing due to the efforts of the govt, transfers from Union govt in the form of grants-in-aid and share in central taxes as a proportion of total revenue receipts have reduced significantly,” Thennarasu told the assembly.
“Withholding of funds under Samagra Shiksha, denial of funds under NDRF for cyclone Fengal, release of a paltry Rs 276 crore for to mitigate cyclone Michaung and floods in southern districts, have all caused severe strain on the state finances.”
The total funds received from Centre as a percentage of GSDP to the state fell from 3.41% in 2016-17 to 1.96% in 2024-25. In current GSDP terms, the reduction amounts to Rs 45,182 crore, which is more than 44% of TN’s estimated fiscal deficit, the finance minister said. The govt plans to borrow ₹1.62 lakh crore and repay Rs 55,844 crore during 2025-26. This puts the outstanding borrowing as on March 31, 2026 at Rs9.3 lakh crore.
Taking note of emerging technologies, the finance minister spoke of a Semiconductor Mission that could give the state an advantage in making chips and electric vehicles. The budget also sought to set up an ecosystem for space tech and deep-sea discovery. Giving a further push to tourism, the minister announced a new airport would be set up at Rameswaram, a pilgrim centre.
And no move on the political chessboard would be complete without some praise for the leader. “The entire nation admires and applauds the unwavering determination of our honourable chief minister in safeguarding the welfare of Tamil Nadu and maintaining balance despite countless obstacles,” Thennarasu said, while highlighting and allocating funds for schemes that bear the prefix ‘CM’.