In a stark revelation during Tuesday’s assembly session, Tamil Nadu Finance Minister Thangam Thennarasu unveiled interim budget figures showing the state’s public debt ballooning to ₹10.71 lakh crore by 2026-27.
The projection marks an escalation from ₹9.52 lakh crore in 2025-26’s revised estimates, which itself exceeded the original ₹9.29 lakh crore forecast. A significant portion of this apparent rise stems from ₹9,523 crore allocated for Chennai Metro Rail Phase-II, classified under central sector projects.
Despite urgings, the Union government has failed to book this expenditure, leading to an inflated state debt tally, the minister explained. Stripping out this amount, debt levels adjust to ₹9.42 lakh crore for 2025-26 and ₹10.62 lakh crore for the upcoming year.
Looking ahead, Tamil Nadu intends to raise ₹1.79 lakh crore in fresh borrowings against ₹60,413.42 crore in repayments, pegging the debt-GSDP ratio at 26.12%. Revenue deficit is estimated at ₹48,696.32 crore for 2026-27, a reduction from the previous year’s revised ₹69,219 crore.
Thennarasu blamed the prior year’s deficit widening on reduced GST collections, withheld funds for central schemes, and escalated subsidies for power distribution losses. Fiscal discipline shines through with the deficit target of ₹1.21 lakh crore, or 3% of GSDP, down from 3.48%.
The minister lamented insufficient central aid, which he said hampers the state’s fiscal health. As Tamil Nadu balances infrastructure ambitions with debt management, these estimates signal cautious optimism amid economic headwinds.