Will TN's outstanding debt reach Rs 10.71 lakh crore by 2026-27?
Synopsis
Tamil Nadu's public debt is set to hit Rs 10.71 lakh crore by 2026-27, according to Finance Minister Thangam Thennarasu. This projection, disclosed during the Interim Budget presentation, highlights the state's escalating financial challenges, including a significant Revenue Deficit and the impact of GST cuts. The government's fiscal strategies are under scrutiny as the state navigates its debt landscape.
Key Takeaways
Tamil Nadu's public debt expected to reach Rs 10.71 lakh crore by 2026-27.
Debt projected to rise from Rs 9.52 lakh crore in the previous year.
Revenue Deficit for 2026-27 estimated at Rs 48,696.32 crore.
Fiscal Deficit projected at Rs 1.21 lakh crore, showing slight improvement.
Need for better cooperation from the Centre to manage financial challenges.
Chennai, Feb 17 (NationPress) The outstanding public debt of Tamil Nadu is anticipated to soar to Rs 10.71 lakh crore in the fiscal year 2026-27, according to Finance Minister Thangam Thennarasu during the presentation of the Interim Budget in the Assembly.
As per the Interim Budget Estimates for 2026-27, the state’s debt is projected to increase from Rs 9.52 lakh crore in the Revised Estimates for 2025-26. Previously, the Budget Estimates for 2025-26 had estimated the outstanding debt at Rs 9.29 lakh crore.
However, the finance minister pointed out that the Revised Estimates for 2025-26 include Rs 9,523 crore linked to the Chennai Metro Rail Phase-II project, which was sanctioned as a Central Sector Project.
He mentioned that this figure should be reflected in the accounts of the Union government. He stated, “Despite numerous requests, the necessary accounting adjustments have not been made by the Union government, resulting in a misleading increase in our debt.”
If this amount is excluded, the state’s outstanding debt would be 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.
For the fiscal year 2026-27, the state aims to borrow Rs 1.79 lakh crore while repaying Rs 60,413.42 crore. The debt-to-Gross State Domestic Product (GSDP) ratio is estimated at 26.12 percent.
The Interim Budget also forecasts a Revenue Deficit of Rs 48,696.32 crore for 2026-27. In comparison, the Revenue Deficit was recorded at Rs 69,219 crore in the Revised Estimates for 2025-26, contrasting with Rs 41,635 crore in the original Budget Estimates for that same year.
Thennarasu attributed the increase in the Revenue Deficit during 2025-26 to GST rate reductions, the withholding of funds under Centrally Sponsored Schemes, and growing expenses related to loss funding for the Tamil Nadu Power Distribution Corporation Limited (TNPDCL).
He argued that, without these fiscal hurdles, the deficit could have been kept in line with initial forecasts.
The Fiscal Deficit for 2026-27 is projected at Rs 1.21 lakh crore, slightly lower than Rs 1.24 lakh crore in the Revised Estimates for 2025-26.
As a percentage of GSDP, it is expected to decrease from 3.48 percent to 3 percent, indicating a move towards fiscal consolidation.
The Minister asserted that the state’s financial stance would have been stronger had the Centre provided more support during the current fiscal year.
Point of View
The rising public debt of Tamil Nadu underscores the broader fiscal challenges faced by states in India. The increasing Revenue Deficit and reliance on borrowing highlight the need for a more robust fiscal strategy. It’s essential for the state to address these issues proactively while seeking greater cooperation from the central government to ensure sustainable economic growth.
NationPress
21 Jun 2026
Frequently Asked Questions
What is the projected public debt of Tamil Nadu for 2026-27?
Tamil Nadu's public debt is projected to reach Rs 10.71 lakh crore by 2026-27.
What factors contribute to the rising debt?
The rising debt is attributed to various factors, including GST rate cuts, increased expenditure, and the withholding of funds from Centrally Sponsored Schemes.
How does the state's debt impact its finances?
The state's increasing debt may lead to higher fiscal challenges, including a significant Revenue Deficit and a need for more borrowing.
What is the debt-to-GSDP ratio for 2026-27?
The debt-to-Gross State Domestic Product (GSDP) ratio is estimated at 26.12 percent for 2026-27.
What is the Fiscal Deficit projection for 2026-27?
The Fiscal Deficit for 2026-27 is estimated at Rs 1.21 lakh crore.
