Tamil Nadu revised Budget: Outstanding debt at ₹10.98 lakh crore, revenue deficit up

Tamil Nadu Finance Minister N. Marie Wilson presented the Revised Budget for 2026-27 in the Legislative Assembly on Wednesday (August 5, 2026). This is the first budget presentation by the government led by the Tamilaga Vettri Kazhagam (TVK), which assumed office after the recent Assembly elections. The Minister detailed the state's fiscal position, highlighting a marginal reduction in outstanding debt and a wider revenue deficit.

According to the Revised Budget Estimates (RBE), the state's overall outstanding debt is estimated at ₹10,98,768 crore, compared with ₹10,99,458 crore projected in the Interim Budget Estimates (IBE). This debt includes public debt and public account liabilities. Mr. Wilson noted that the public debt includes ₹9,523 crore that could be transferred to the Union government's books once the Chennai Metro Rail Phase II project is approved as a Central Sector Project.

The debt-to-GSDP ratio is pegged at 27.01% in the RBE, slightly lower than 27.03% in the IBE.

On revenue estimates, the State's Own Tax Revenue (SOTR) has been revised downward to ₹2,26,740 crore from the IBE projection of ₹2,29,579 crore. The Minister said the recalibration aligns with observations in the White Paper on Fiscal Management, which pointed to past over-estimations. SOTR is expected to grow at 9.78% over the Revised Estimates (RE) of 2025-26.

State Own Non-Tax Revenue is estimated at ₹27,835 crore in the RBE, up from ₹26,265 crore in the RE 2025-26.

Grants-in-aid from the Union government have been revised upward substantially. The Centre has replaced the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) with a new scheme called Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin), or VB-G RAM G. An amount of ₹7,586 crore has been provided under this scheme with a 60:40 cost-sharing pattern. Additionally, ₹3,461 crore due to Tamil Nadu under MGNREGS has been included in the RBE. Total grants-in-aid from the Centre now stand at ₹32,922 crore.

The State's share in central taxes remains unchanged at ₹62,531 crore in the RBE, as per the Union Budget allocation. Consequently, Total Revenue Receipts are projected at ₹3,50,027 crore in the RBE, an increase of ₹5,452 crore over the IBE estimate of ₹3,44,575 crore.

On the expenditure side, Total Revenue Expenditure has been revised upward to ₹4,05,802 crore from ₹3,93,272 crore in the IBE. This increase is attributed to mandatory outlays for new flagship commitments, agricultural crop loan waivers, 200 units of free electricity, and the Thaimaaman Thanga Mothiram scheme.

Capital Expenditure, however, has been reduced to ₹56,985 crore in the RBE from ₹59,562 crore in the IBE. The total capital outlay, including net loans and advances, is estimated at ₹66,060 crore.

The Revenue Deficit is now estimated at ₹55,775 crore in the RBE, significantly higher than the IBE estimate of ₹48,696 crore. Mr. Wilson explained that the earlier figure was an underestimate due to overestimation of revenue receipts and underestimation of revenue expenditure. The Fiscal Deficit is estimated at ₹1,21,819 crore in the RBE, slightly lower than the IBE estimate of ₹1,21,949 crore. The Minister assured that the fiscal deficit remains within the limits set by the Tamil Nadu Fiscal Responsibility Act, 2003.

The revised estimates reflect the new government's priorities, balancing welfare commitments with fiscal discipline. The increase in revenue expenditure is largely driven by newly announced schemes, while capital spending has been trimmed. The government has maintained that the overall fiscal position remains under control.