Tamil Nadu Interim Budget: Government’s outstanding debt expected to increase to ₹10.71 lakh crore

Finance Minister Thangam Thennarasu on Tuesday (February 17, 2026) said the outstanding debt of the Tamil Nadu government, according to the Interim Budget Estimates for 2026-27, is expected to stand at ₹10.71 lakh crore.

In the Revised Estimates 2025-26, the outstanding debt of the State is estimated to be ₹9.52 lakh crore as against ₹9.29 lakh crore in the Budget Estimates 2025-26. However, this includes ₹9,523 crore, which should reflect in the accounts of the Union government after the approval of Chennai Metro Rail Phase-II project as a Central Sector Project, Mr. Thennarasu said while presenting the Interim Budget in the Assembly.

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“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. Excluding this amount, the outstanding debt has been estimated to be ₹9.42 lakh crore in the Revised Estimates and ₹10.62 crore in the Interim Budget Estimates 2026-27,” he said.

The State plans to borrow ₹1.79 lakh crore during 2026-27 and make repayment of ₹60,413.42 crore. The debt-to-GSDP ratio is estimated to be 26.12.

According to the Interim Budget Estimates, the Revenue Deficit for 2026-27 is estimated at ₹48,696.32 crore. It was ₹69,219 crore in the Revised Estimates 2025-26 as against ₹41,635 crore in the Budget Estimates 2025-26. Mr. Thennarasu attributed the increase to factors including GST rate cuts, withholding of funds under Centrally Sponsored Schemes, increase in expenditure for loss funding to TNPDCL. “Without these fiscal challenges created by the Union government, the Revenue Deficit in the current year could have been contained in line with the Budget Estimates,” he contended.

The Fiscal Deficit in the Interim Budget Estimates 2026-27 is estimated to be ₹1.21 lakh crore. It was ₹1.24 lakh crore, as per the Revised Estimates 2025-26. The Fiscal Deficit as a percentage of GSDP is estimated to reduce from 3.48% in the Revised Estimates 2025-26 to 3% in the Interim Budget Estimates 2026-27. The Minister said this position could have been much better in the current financial year had the Union government extended necessary cooperation to the State.