Tamil Nadu’s ambitious goal of building a trillion-dollar economy by 2030 requires a bold vision with an emphasis on the 5Es: Education, Employment, Exports, Environment, and Equity. Policy announcements in the 2025-26 state budget take measured steps toward the economic vision, though successful implementation and sustainable financing will determine their effectiveness.
Investment in education is the backbone of human capital formation. The budget promotes investments in early childhood to higher education, with a digital emphasis. The Chief Minister’s Breakfast Scheme expansion to urban govtaided schools is a positive step if the nutritional content of the meal is ensured. The substantial investment in providing 20 lakh college students with tablets or laptops reflects the recognition that digital literacy is essential for future workforce participation. It will be important to ensure correct targeting and good-quality machines.
The govt plans to address a critical information gap about the Naan Mudhalvan-Kalloori Kanavu pro gramme, which helps students, especially in govt schools, learn about scholarship opportunities at 350-plus top educational institutions in India and abroad. In another positive move, the govt is providing scholarships to govt schools students to attend top universities abroad. The skills development ecosystem gets support through new industrial training institutes that aim to align vocational training with industry requirements.
Employment generation and exports are closely related. The budget’s industrial strategy demonstrates sectoral targeting based on Tamil Nadu’s evolving competitive advantages. The Semiconductor Mission-2030 represents an attempt to capitalise on the state’s growing electronics manufacturing base. The new Maritime Transport Manufacturing Policy aims to revive Tamil Nadu’s historical shipbuilding prowess while generating an estimated 30,000 jobs in coastal districts.
The state’s approach to industrial employment reflects demographic targeting, with footwear manufacturing specifically positioned to employ rural women (80% of the workforce in these clusters). Such gender targeting of employment sectors tends to increase occupation segregation between genders further. In contrast, the budget made a welcome announcement of ten new Thozhi working women’s hostels, allowing young single wom en to move to urban areas to take up higher value-added jobs.
The budget also announced interventions aimed at developing entrepreneurship among women through subsidised loans. However, it missed outlining steps toward strengthening quality and accessible childcare provision in urban areas, such as school-based creches, allowing women to take up employment.
The budget speaks of plans to fill 40,000 govt positions in the coming year, building on more than 78,000 govt jobs created during the current administration. Vacancies should be filled in the healthcare, education, and childcare sectors. The budget establishes a framework for gig economy workers through the Tam il Nadu Platform-Based Gig Workers Welfare Board.
On the environmental front, water resource management has emerged as a priority, reflecting both climate vulnerability and urbanisation pressures. The most ambitious urban initiative is the development of a ‘Global City’ near Chennai on 2,000 acres, though financing mechanisms remain unspecified. Unlike what happened in Gurgaon, where rapid growth occurred without adequate planning, a new city near Chennai is a chance for thoughtful urban design that incorporates environmental sustainability.
On gender equity, moving beyond ₹1,000 monthly cash support, which tends to go towards consumption, the budget introduces asset ownership incentives for women through a one per cent reduction in registration fees for women registering property up to ₹10 lakh.
The budget demonstrates policy formulation in the right direction but could face implementation challenges in an environment of constrained fiscal space and evolving Centre-state relations. The coming year will reveal whether the state can maintain its welfare model while delivering on its ambitious education, export, and employment targets to achieve industrial transformation at scale.
(VIDYA MAHAMBARE: The writer is a professor at Great Lakes Institute of Management)