Rising Debt As Centre Has Clipped Financial Autonomy Of TN

A few days after the state budget was presented, Finance Minister Thangam Thennarasu, who also holds several other portfolios such as Planning, Human Resources Management, Statistics, and Archaeology, spoke to TNIE at length about the fund allocations, state’s fiscal health, and the ruling DMK government’s plans for the future

- PON VASANTH BA & ANTO T JOSEPH

●What was Tamil Nadu government's approach to the 2025-26 budget, considering this was the last full-fledged budget before the 2026 Assembly election? The mandate given by our chief minister was that it should be in line with our motto of 'Ellorukkum Ellam (Everything for everyone)' and futuristic to ensure the state's growth in not just 2025-26 but in the years to come. Hence, I would say, from archaeology to artificial intelligence, the budget captures the government's vision of being farsighted while remaining rooted in the rich Dravidian heritage, trying to unearth the missing links of our past.

◆ State's outstanding debt is expected to touch ₹9.3 lakh crore by 2025-26... As we have already made clear, the debt needs to be seen in the context of our Gross State Domestic Product (GSDP). Tamil Nadu's debt to GSDP ratio is 26.43% as per the revised estimates (RE) for 2024-25 and it will be 26.07% in 2025-26 as per budget estimates (BE). This is well within the 28% limit set by the 15th Finance Commission. We certainly want to bring it down further and are making

strides in that direction.

Tamil Nadu is going for more debt because our financial autonomy has been clipped by the union government, with the introduction of Goods and Services Tax (GST), Ujwal DISCOM Assurance Yojana, and such schemes. To worsen it, the union government is not releasing part of our grants-in-aid by imposing unreasonable conditions.

Moreover, even though TN accounts for 9% of the country's GDP, the total funds we receive from the union government, as a share of our GSDP, has come down from 3.41% in 2016-17 to just 1.96% in 2025-26. The ever-increasing cess collected by the Government of India is not shared with the states. There are now reports that the union government has informally asked the 16th Finance Commission to bring down the devolution of central taxes to states from 41% to 40%.