Tamil Nadu Budget 2025-26: Debt-to-GSDP Ratio Set at 26.07%
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Synopsis
On March 14, Tamil Nadu's Finance Minister Thangam Thenarasu presented the state's Medium-Term Fiscal Plan for 2025-26, revealing plans for substantial borrowing and fiscal projections, with a Debt-to-GSDP ratio of 26.07%. Key allocations include significant funds for education and infrastructure development.
Key Takeaways
- Tamil Nadu to borrow Rs 1,62,096.76 crore in 2025-26.
- Debt-to-GSDP ratio projected at 26.07%.
- Total revenue expenditure is Rs 3,73,204 crore.
- Capital expenditure allocation is Rs 57,231 crore.
- Focus on electronics and EV manufacturing.
Chennai, March 14 (NationPress) The Finance Minister of Tamil Nadu, Thangam Thenarasu, unveiled the Medium-Term Fiscal Plan (MTFP) for 2025-26, detailing the state's borrowing and fiscal outlook.
As per the budget estimates, the Tamil Nadu government is projected to borrow Rs 1,62,096.76 crore in 2025-26, while repaying Rs 55,844.53 crore of its existing debt.
By the end of March 2026, the total outstanding debt for the state is anticipated to reach Rs 9,29,959.3 crore, with the Debt-to-Gross State Domestic Product (GSDP) ratio estimated at 26.07 percent.
In the 2025-26 budget, Tamil Nadu's total revenue expenditure is projected at Rs 3,73,204 crore, while total revenue receipts are expected to be Rs 3,31,569 crore.
Revenue expenditure encompasses costs related to salaries, pensions, subsidies, grants, and interest payments, whereas revenue receipts are derived from tax and non-tax sources, as well as grants from the Centre and Tamil Nadu's share of central taxes.
The budget allocates Rs 57,231 crore for capital expenditure, which involves investments in fixed assets like civic infrastructure, buildings, and public sector undertakings.
According to revised estimates for 2024-25, Tamil Nadu’s fiscal deficit is at 3.26 percent of the GSDP. The projection for 2025-26 is set at 3 percent of the GSDP, according to the budget.
Finance Minister Thenarasu highlighted Tamil Nadu’s robust economic performance, noting that the state is a vital growth engine, supported by its solid manufacturing base, expanding services sector, and ongoing public and private investments.
The minister also pointed out Tamil Nadu's rise as a leader in electronics and Electric Vehicle (EV) production, drawing significant investments.
Electronics exports from Tamil Nadu soared from $1.66 billion in 2021-22 to $5.37 billion in 2023-24, with forecasts indicating a rise beyond $12 billion in 2024-25. The highest sectoral allocation is Rs 55,261 crore for education, followed by urban and rural development.
Notable budget announcements include Rs 2,000 crore for a program aimed at providing high-tech devices to 20 lakh college students over two years, Rs 1,051 crore for the rehabilitation of run-down tenements, Rs 88 crore for climate-resilient sponge parks, and Rs 400 crore for riverside development initiatives.
Thenarasu delivered one of the longest budget speeches, lasting over two hours and 30 minutes, at the Assembly Hall in Fort St. George, Chennai. This marks the last comprehensive budget of the DMK government before the upcoming Tamil Nadu Assembly elections scheduled for next year.
