3 months ago
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Tamil Nadu Finance Minister Thangam Thennarasu connected Tuesday (February 17, 2026) said the State has been facing unprecedented fiscal challenges from the Union government, which appears to beryllium leaving nary chromatic unturned to “artificially precipitate” a fiscal situation successful Tamil Nadu.
Outlining a bid of those challenges portion presenting the Interim Budget for 2026-27 successful the Assembly, Mr. Thennarasu said the Goods and Services Tax (GST) complaint rationalisation was approved by the GST Council without considering the apprehensions and absorption recorded by respective States. Even arsenic States are reeling nether fiscal accent caused aft the termination of the GST compensation regime, this hurried workout has resulted successful different important stroke to the State finances. The gross shortfall for the Tamil Nadu authorities is estimated to beryllium astir ₹9,600 crore successful the existent fiscal year.
Read the afloat Budget code here.
In April 2025, the Union authorities deducted a bulk magnitude of ₹1,709 crore for IGST colony from the State’s relationship successful Reserve Bank of India (RBI) without owed intimation oregon consultation. This has added to the gross shortfall nether GST, severely constraining our finances during the existent fiscal year, Mr. Thennarasu said. The stock successful Central Taxes allocated to Tamil Nadu successful the Union Budget 2025-26 has been reduced successful the Revised Estimates. This has resulted successful an unanticipated shortfall of ₹1,202 crore to the State authorities existent fiscal year, helium added.
Using its powers nether Article 293(3) of the Constitution of India for fixation of the borrowing ceiling of the States, the Union authorities has mandated that a level of 5% of outstanding guarantees has to beryllium maintained successful the Guarantee Redemption Fund (GRF). This information has been imposed abruptly successful the existent fiscal twelvemonth resulting successful an unbudgeted expenditure of ₹3,087 crore, the Finance Minister said successful his speech.
Further, successful workout of the powers nether Article 293, the Union authorities has mandated that the State authorities wage an magnitude of ₹16,290 crore arsenic Loss Funding to Tamil Nadu Power Distribution Corporation Limited (TNPDCL); otherwise, an equivalent magnitude volition beryllium deducted from the State’s borrowing ceiling. When compared to the existent nonaccomplishment of ₹413 crore of TNPDCL, this information has resulted successful an further expenditure of ₹15,877 crore successful the existent fiscal year, helium said.
Funds owed to T.N.
At a clip erstwhile each State governments are nether unit owed to rising expenditure commitments, Tamil Nadu is further being denied releases nether Centrally Sponsored Schemes that are legitimately owed to the State. These see an magnitude of ₹3,548 crore withheld by the Union authorities nether the Samagra Shiksha Scheme, denial of a sum of ₹3,112 crore nether Jal Jeevan Mission, and an magnitude of ₹2,246 crore of Finance Commission Grants, which has not been released to the State government, Mr. Thennarasu said
Even aft support by the Union authorities of the long-pending request to instrumentality up Chennai Metro Rail Phase-II project successful a 50:50 sharing pattern, each the benefits of this task person not been received by the State government. The State authorities has incurred an expenditure of astir ₹9,500 crore arsenic outgo towards the Union government’s share, which continues to beryllium reflected as portion of the State’s outstanding debt, helium said.
This not lone adversely affects the State’s debt-to-GSDP ratio but has besides reduced our quality to get wrong our permissible borrowing limits, frankincense impacting our liquidity. Despite repeated reminders, the Union authorities has not acted upon our petition truthful far, helium added.
