Tamil Nadu debt to keep rising, says Finance Secretary; revenue deficit ₹55,775 crore
Tamil Nadu's debt burden will continue to rise and cannot be reduced, Finance Secretary M.A. Siddique said on Wednesday, as the State government presented its Budget for 2026-27 in the Legislative Assembly. Speaking to reporters in Chennai, he acknowledged that the State's finances had been "in a bad shape" until three months ago, but said significant corrective measures have been taken since then.
The Budget estimates reveal a substantial gap in the State's finances. Total receipts for the financial year are projected at ₹3,50,766 crore, while total expenditure is estimated at ₹4,72,585 crore. This leaves a revenue deficit of ₹55,775 crore. In simple terms, the State's revenue expenditure — which includes salaries, pensions, interest payments and subsidies — exceeds its revenue receipts from taxes, fees and other sources. This gap is typically bridged through borrowings, which adds to the overall debt.
Mr. Siddique emphasised that the rate of income growth must outpace the rate at which debt rises. "The State's finances were in a bad shape until three months ago. We have taken significant action over the last three months," he said. His remarks suggest that the government is not aiming for an immediate reduction in debt, but rather to stabilise the situation over time.
During his Budget speech, Finance Minister N. Marie Wilson said the government has taken action towards the mobilisation of nearly ₹15,000 crore through various measures. Mr. Siddique later clarified that about ₹2,000 crore has already come in. He highlighted efforts on the liquor front, which have achieved about ₹1,500 crore. "Action is being taken on the stamps and duties registration side to review the anomalies in areas like guideline value. The outcome of all of this will be seen over the next few months," he noted.
On indirect taxes, the government expects healthy growth. "We have worked a lot on the commercial taxes and GST fronts. There is a need to gain confidence among taxpayers. We expect GST (Goods and Services Tax) revenue growth of around 12%," Mr. Siddique said. The Budget also projects that Value Added Tax (VAT) and excise collections from alcohol will rise to ₹55,962 crore in 2026-27 from ₹51,000 crore in the previous year.
When asked about the State spending on gold coins and gold rings despite the high debt, Mr. Siddique defended the expenditure, saying the State needs "social, human, and physical capital." He said these are not dole-outs but schemes that empower people, especially women. He added that the TVK-led government has not cut down on any welfare schemes.
The Finance Secretary's responses come at a time when the State is trying to balance fiscal prudence with welfare commitments. The government has said it will not reduce spending on social schemes, even as it works to increase revenue. The Budget's focus on improving tax collections and reviewing anomalies in registration fees is part of this balancing act.
The government's approach appears to be focused on increasing revenue through better tax compliance, revision of guideline values, and improved collections from State-run liquor sales. The projected 12% growth in GST revenue is a key component of this strategy. With the revenue deficit projected to persist, the State's debt is expected to continue its upward trajectory, as acknowledged by the Finance Secretary.
