Tamil Nadu’s Finance Minister, Thangam Thennarasu, revealed that the state’s outstanding public debt is expected to hit Rs 10.71 lakh crore by 2026-27, as per the Interim Budget presented in the Assembly. This projection marks an increase from the Rs 9.52 lakh crore recorded in the Revised Estimates for 2025-26. Notably, the 2025-26 Revised Estimates include Rs 9,523 crore linked to the Chennai Metro Rail Phase-II project, approved as a Central Sector Project.
Thennarasu highlighted that the absence of necessary book adjustments by the Union government has artificially inflated the state’s debt. Excluding the Chennai Metro Rail Phase-II project amount, the state’s outstanding debt would have been Rs 9.42 lakh crore in the Revised Estimates for 2025-26 and is now projected at Rs 10.62 lakh crore in the Interim Budget Estimates for 2026-27.
In the upcoming fiscal year, Tamil Nadu plans to borrow Rs 1.79 lakh crore and repay Rs 60,413.42 crore, with a debt-to-Gross State Domestic Product (GSDP) ratio estimated at 26.12%. The Interim Budget also forecasts a Revenue Deficit of Rs 48,696.32 crore for 2026-27, attributing the rise in the previous year to various factors including GST rate cuts and increased expenditure on loss funding for Tamil Nadu Power Distribution Corporation Limited (TNPDCL).
The Fiscal Deficit for 2026-27 is expected to be Rs 1.21 lakh crore, slightly lower than the previous year, with a projected decline in percentage of GSDP from 3.48% to 3%, indicating fiscal consolidation. Thennarasu emphasized that the state’s financial position could have been stronger with greater cooperation from the Centre during the current financial year.
