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The Tamil Nadu budget for the upcoming fiscal year, presented by Finance Minister Thangam Thennarasu, is a meticulously crafted document that attempts to navigate a complex landscape of social welfare commitments, infrastructure development needs, escalating debt burdens, and an increasingly strained relationship with the Union government, all while keeping an eye firmly fixed on the 2026 Assembly elections. The budget, with a total outlay of Rs 4.39 lakh crore, is a clear articulation of the ruling DMK's political priorities and economic philosophy. It seeks to reinforce the party's commitment to social security through a combination of direct cash transfers, expanded state-sponsored subsidies, and targeted welfare programs, while simultaneously investing in ambitious infrastructure projects aimed at driving economic growth and improving the state's competitiveness. This balancing act, however, is fraught with challenges, particularly in the context of rising debt levels and the need to maintain fiscal discipline. The budget's success will ultimately depend on the government's ability to effectively manage its finances, generate sufficient revenue, and ensure that its investments yield tangible economic and social benefits. The DMK government's approach to education funding is a notable aspect of this budget. Following disagreements with the Union government over language policy and the rejection of the three-language formula, which led to the withholding of Rs 2,152 crore in education funds, the state government has decided to independently fund school education, increasing allocation to Rs 46,767 crore. This decision underscores the state's commitment to its long-standing opposition to Hindi imposition, a politically charged issue in Dravidian politics. The state will now fund Samagra Shiksha salaries and bilingual curriculum development without the Centre’s assistance, highlighting a significant assertion of state autonomy in educational matters. This move also allows the state government to tailor the curriculum and educational policies to better reflect the specific needs and priorities of Tamil Nadu, without being constrained by the Union government's directives. The budget’s emphasis on infrastructure development is equally significant. Recognizing the importance of modern infrastructure for economic growth and job creation, the government has allocated substantial resources to upgrading roads, expanding public transportation networks, and developing new urban centers. The proposed “Global City” near Chennai, envisioned as a 2,000-acre smart urban hub featuring IT parks, fintech zones, research hubs, and modern public infrastructure, is a particularly ambitious project that could potentially transform the region into a major economic and innovation hub. The upgrade of 6,483 km of roads in corporations, municipalities, and town panchayats at an estimated cost of Rs 3,750 crore is another key infrastructure initiative that will improve connectivity and facilitate economic activity across the state. These investments in infrastructure are crucial for attracting private investment, creating employment opportunities, and improving the overall quality of life for the state's residents. However, the budget's ambitious welfare agenda and infrastructure development plans are juxtaposed against the backdrop of a growing debt burden. With the state debt projected to reach Rs 9.3 lakh crore by March 2026, constituting 26.07% of the Gross State Domestic Product (GSDP), Tamil Nadu remains one of India’s most fiscally stretched economies. The government plans to borrow Rs 1.62 lakh crore this fiscal year while repaying Rs 55,844 crore, indicating a significant reliance on borrowing to finance its spending. While capital outlay has seen a substantial increase of 22.4%, reaching Rs 57,231 crore, revenue expenditure has also risen by 9.95% to Rs 3.73 lakh crore, suggesting that a significant portion of the budget is allocated to non-productive spending. The state's own tax revenue is estimated to grow 14.6% in 2025-26, with major collections from commercial taxes (Rs 1.63 lakh crore), stamps and registration (Rs 26,109 crore), motor vehicle taxes (Rs 13,441 crore), and state excise (Rs 12,944 crore). However, whether this revenue growth will be sufficient to offset the rising debt burden and finance the state's ambitious spending plans remains to be seen. The budget's focus on women's empowerment is another noteworthy aspect. The continued and expanded direct benefits to women, rural communities, and weaker sections reflect the DMK government's commitment to inclusive growth and social justice. The Kalaignar Magalir Urimai Thittam (KMUT), under which Rs 13,807 crore is allocated for Rs 1,000 monthly assistance to 1.15 crore women, is a flagship program that aims to improve the financial security of women and empower them to make independent decisions. The expansion of the KMUT to include more beneficiaries underscores the government's commitment to reaching a wider segment of the population. The one-percent reduction in property registration fees for assets up to Rs 10 lakh, a move expected to encourage more female asset ownership, is another significant step towards promoting women's financial inclusion. The Women Entrepreneurship Development Scheme, offering bank loans of up to Rs 10 lakh with a 20% subsidy, aims to elevate one lakh women as entrepreneurs over five years, providing them with the resources and support they need to start and grow their own businesses. The fare-free bus travel scheme, benefiting 50 lakh women daily, continues to be a cornerstone of Tamil Nadu’s gender-focused policies, providing women with affordable and accessible transportation options. The budget also includes provisions for expanding pensions for widows, the elderly, and the disabled, and providing Rs 2,000 to 50,000 orphaned children. The Tamizh Pudhalvan Scheme, extending the same Rs 1,000 benefit to boys as provided to girl students continuing higher education, marks a new gender-equitable shift in student incentives. The budget also addresses the challenges posed by the state's rapidly growing urban population. The Rs 2,423 crore “ring main” pipeline project to resolve Chennai’s water distribution challenges and expansion of metro rail networks are critical investments in urban infrastructure that will improve the quality of life for residents and support economic growth. The government's announcement of the development of a “Global City” near Chennai reflects its ambition to transform the region into a world-class urban center. In addition to economic and social initiatives, the budget also includes provisions for cultural preservation and environmental protection. The allocation of Rs 7 crore for archaeological excavations, including sites in Keezhadi, Karivalamvanthanallur, and Nagapattinam, reflects the state's commitment to preserving its rich cultural heritage. The deep-sea excavation from Kaveripoompattinam to Nagapattinam aims to uncover Tamil maritime trade with the Roman Empire, providing valuable insights into the state's ancient history. The allocation of Rs 50 crore for a Marine Resource Foundation to protect Tamil Nadu’s 1,076 km coastline and Rs 70 crore for CNG conversions of 700 diesel buses to curb pollution demonstrate the government's commitment to environmental sustainability. The establishment of a Greater Flamingo Sanctuary to safeguard migratory bird habitats in Dhanushkodi further highlights the state's efforts to protect its biodiversity. The budget also allocated Rs 500 crore for Anna University to break into the top 10 Indian institutions and the global QS Top 150 rankings, indicating a commitment to improving the quality of higher education in the state. A Rs 40 crore bronze statue gallery at Egmore Museum and a Thirukkural translation into 45 languages to reinforce Tamil Nadu’s heritage diplomacy were other announcements made by the state finance minister on Friday. In conclusion, the Tamil Nadu budget is a comprehensive document that reflects the DMK government's commitment to social welfare, economic growth, and cultural preservation. However, the budget also faces significant challenges, particularly in the context of rising debt levels and the need to maintain fiscal discipline. The government's ability to effectively manage its finances, generate sufficient revenue, and ensure that its investments yield tangible economic and social benefits will be crucial for the state's future prosperity.
Source: In Tamil Nadu budget, a high-stakes mix of welfare, debt and infrastructure in election year