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Tamil Nadu's Debt to Hit Rs 10.71 Lakh Crore by 2026-27, Says Finance Minister

Tamil Nadu Finance Minister Thangam Thennarasu presented the Interim Budget, projecting the state's outstanding public debt to reach Rs 10.71 lakh crore by 2026-27. He contended that a portion of the current debt is artificially inflated due to the Union government not processing book adjustments for the Chennai Metro Rail Phase-II project. The budget estimates a Revenue Deficit of Rs 48,696 crore for 2026-27, while the Fiscal Deficit is projected to decline to 3% of GSDP. The Minister attributed fiscal challenges to GST cuts, withheld central funds, and power sector losses.

Key Points: TN Debt to Reach Rs 10.71 Lakh Crore: Finance Minister

  • Debt to hit Rs 10.71 lakh crore by 2026-27
  • Minister blames Centre for artificial debt inflation
  • Fiscal deficit projected to decline to 3% of GSDP
  • Revenue deficit for 2026-27 estimated at Rs 48,696 crore
2 min read

TN's outstanding debt to touch Rs 10.71 lakh crore in 2026-27: Minister Thangam Thennarasu

Tamil Nadu's public debt projected at Rs 10.71 lakh crore for 2026-27. Minister cites Centre's non-cooperation for artificial inflation of state's debt figures.

"Despite repeated requests, the necessary book adjustment entries have not been carried out by the Union government, leading to an artificial increase in our debt. - Thangam Thennarasu"

Chennai, Feb 17

Tamil Nadu's outstanding public debt is projected to reach Rs 10.71 lakh crore in 2026-27, Finance Minister Thangam Thennarasu said on Tuesday while presenting the Interim Budget in the Assembly.

According to the Interim Budget Estimates for 2026-27, the state's debt is expected to rise from Rs 9.52 lakh crore in the Revised Estimates for 2025-26. The earlier Budget Estimates for 2025-26 had pegged the outstanding debt at Rs 9.29 lakh crore.

However, the state finance minister clarified that the 2025-26 Revised Estimates include Rs 9,523 crore related to the Chennai Metro Rail Phase-II project, which was approved as a Central Sector Project.

He said this amount should reflect in the Union government's accounts. "Despite repeated requests, the necessary book adjustment entries have not been carried out by the Union government, leading to an artificial increase in our debt," he contended.

Excluding this amount, the state's outstanding debt would stand at Rs 9.42 lakh crore in the Revised Estimates for 2025-26 and Rs 10.62 lakh crore in the Interim Budget Estimates for 2026-27, he said.

For 2026-27, the state plans to borrow Rs 1.79 lakh crore and repay Rs 60,413.42 crore. The debt-to-Gross State Domestic Product (GSDP) ratio is estimated at 26.12 per cent.

The Interim Budget also projects a Revenue Deficit of Rs 48,696.32 crore for 2026-27. In comparison, the Revenue Deficit stood at Rs 69,219 crore in the Revised Estimates for 2025-26, against Rs 41,635 crore in the original Budget Estimates for that year.

Thennarasu attributed the rise in the Revenue Deficit during 2025-26 to GST rate cuts, the withholding of funds under Centrally Sponsored Schemes, and increased expenditure towards loss funding for Tamil Nadu Power Distribution Corporation Limited (TNPDCL).

He argued that, without these fiscal challenges, the deficit could have been contained in line with initial projections.

The Fiscal Deficit for 2026-27 is estimated at Rs 1.21 lakh crore, marginally lower than Rs 1.24 lakh crore in the Revised Estimates for 2025-26.

As a percentage of GSDP, it is projected to decline from 3.48 per cent to 3 per cent, indicating fiscal consolidation.

The Minister maintained that the state's financial position could have been stronger had the Centre extended greater cooperation during the current financial year.

- IANS

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Reader Comments

P
Priyanka N
The minister has a point about the Centre's lack of cooperation. If ₹9,523 crore for the Metro is a central project, why is it on TN's books? This kind of accounting creates a false narrative about the state's financial health. 🤔
K
Karthik V
Debt-to-GSDP ratio at 26% is still within manageable limits compared to some other states. The key is how this borrowed money is used. Is it for capital expenditure that will boost growth, or just to fund revenue deficits? The budget speech should clarify this more.
S
Sarah B
As someone who recently moved to Chennai for work, I see the Metro expansion everywhere. It's disruptive now, but will be great for the city's future. If the debt is partly for such projects, it might be an investment worth making. The fiscal deficit coming down to 3% is a positive sign.
M
Manish T
With all due respect to the Minister's explanation, the numbers are worrying. GST cuts and power distribution losses are recurring issues. We need a long-term plan to increase revenue, not just borrow more. The next generation will bear the burden of this debt.
A
Ananya R
True, the debt is high, but let's not panic. Many developed economies run on much higher debt ratios. The important thing is that our GSDP is also growing. Hope the government ensures transparency and the funds are used efficiently for development work. 🙏

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