The Tamil Nadu government’s interim budget presented on Tuesday, February 17, has made an allocation of Rs 5,463 crore towards various social security schemes. The government also made a note of the revenue shortfall to the state as a result of Union government policy and non-devolution of funds.
The interim budget for the years 2026-27 was presented on Tuesday by Finance Minister Thangam Thennarasu. In the budget speech, he announced the allocation of Rs 5,463 crore for the social security schemes implemented in the state for 35.33 lakh beneficiaries. This includes Old Age Pension, Differently Abled Pension, Destitute Widow Pension and other such schemes.
The minister also informed the Assembly that over the past five years, house site pattas have been issued to 2,356,623 individuals. This included 77,800 online house site pattas granted to families so far under the One-Time Special Regularisation Scheme. These are allocations made to families residing on government poramboke lands in Chennai and adjacent areas as well as other urban belts of the state. While 15,393 of these were issued in Chennai and surrounding areas 62,407 pattas have been distributed in other municipal corporations and
municipalities.
Reduction in state revenue due to Union revenue policies
Presenting the budget, Thangam Thennarasu spoke about the revenue deficit caused due to restriction of funds by the Union government.
“In every field, be it denial of sanction of major infrastructure projects for the state of Tamil Nadu, withholding of release of funds for Centrally Sponsored Schemes, curtailment of tax revenues without due consultation, or unfair imposition of conditions to mandate expenditure, the Union government appears to leave no stone unturned to artificially precipitate a fiscal crisis in Tamil Nadu,” he said.
The minister noted the Goods and Services Tax rate rationalisation without consulting with the state, and the lack of compensation had cost the state an estimated revenue shortfall of Rs 9,600 crore.
He further stated that in April 2025 the Union had deducted Rs 1,709 crore for Integrated GST settlement from the state's account without intimation or consultation.
Further, the state’s share in the Union tax allocation in the Union Budget 2025-26 was also cut as per revised estimates, causing a shortfall of Rs 1,202 crore.
The FM noted also that the state had incurred an unbudgeted expense of Rs 3,087 crore in the 2025-26 fiscal year because the Union government mandated that a level of 5 per cent of outstanding guarantees has to be maintained in the Guarantee Redemption Fund (GRF)
The Union government has also mandated that Tamil Nadu pay a sum of Rs 16,290 crore as loss funding to Tamil Nadu Power Distribution Corporation Limited (TNPDCL). Loss funding refers to funds used to cover expenses incurred or expected from underperforming state enterprises.
In the event of failure to pay, these expenses would be deducted from the state’s borrowing ceiling. The budget speech noted that the actual loss of TNPDCL was Rs 413 crore. This led to an additional expenditure of Rs.15,877 crore in the current financial year.
The state has also not been allowed funds under centrally sponsored schemes, including the Samagra Shiksha scheme amount of Rs 3,548 crore, Rs 3,112 crore under the Jal Jeevan scheme and Rs 2,246 crore of Finance Commission Grants.