Chennai, Feb 17 Tamil Nadu’s outstanding public debt is projected to reach Rs 10.71 lakh crore in 2026-27, Finance Minister Thangam Thennarasu said on Tuesday while presenting the Interim Budget in the Assembly.
According to the Interim Budget Estimates for 2026-27, the state’s debt is expected to rise from Rs 9.52 lakh crore in the Revised Estimates for 2025-26. The earlier Budget Estimates for 2025-26 had pegged the outstanding debt at Rs 9.29 lakh crore.
However, the state finance minister clarified that the 2025-26 Revised Estimates include Rs 9,523 crore related to the Chennai Metro Rail Phase-II project, which was approved as a Central Sector Project.
He said this amount should reflect in the Union government’s accounts. “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,” he contended.
Excluding this amount, the state’s outstanding debt would stand at 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, he said.
For 2026-27, the state plans to borrow Rs 1.79 lakh crore and repay Rs 60,413.42 crore. The debt-to-Gross State Domestic Product (GSDP) ratio is estimated at 26.12 per cent.
The Interim Budget also projects a Revenue Deficit of Rs 48,696.32 crore for 2026-27. In comparison, the Revenue Deficit stood at Rs 69,219 crore in the Revised Estimates for 2025-26, against Rs 41,635 crore in the original Budget Estimates for that year.
Thennarasu attributed the rise in the Revenue Deficit during 2025-26 to GST rate cuts, the withholding of funds under Centrally Sponsored Schemes, and increased expenditure towards loss funding for Tamil Nadu Power Distribution Corporation Limited (TNPDCL).
He argued that, without these fiscal challenges, the deficit could have been contained in line with initial projections.
The Fiscal Deficit for 2026-27 is estimated at Rs 1.21 lakh crore, marginally lower than Rs 1.24 lakh crore in the Revised Estimates for 2025-26.
As a percentage of GSDP, it is projected to decline from 3.48 per cent to 3 per cent, indicating fiscal consolidation.
The Minister maintained that the state’s financial position could have been stronger had the Centre extended greater cooperation during the current financial year.
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