Chennai: A year before the Tamil Nadu election, the Dravida Munnetra Kazhagam (DMK) government Friday presented its last full budget for the year 2025-26, giving a massive boost to infrastructure projects including of setting up a global modern city near Chennai, footwear parks in three districts and industrial parks in four districts, as well as to welfare measures.
The state’s total capital expenditure of Rs 57,231 crore is about 22 percent higher than the previous year’s Rs 46,766 crore. While the total revenue expenditure is estimated at Rs 3,73,204 crore in 2025-26, the total revenue receipts are projected at Rs 3,31,569 crore.
The government is eyeing to keep its fiscal deficit down to 3 percent of the GSDP in the new fiscal. The debt-to-GSDP (Gross State Domestic Product) ratio has increased marginally from 26.21 percent to 26.43 percent.
Blaming the Centre for its unfair devolution of central taxes, Finance Minister Thangam Thennarasu walked the tightrope between the State’s expenditure and the debt, maintaining the limits stipulated under the 15th Finance Commission.
“The fiscal deficit in budget estimates 2025-26 is estimated to be Rs 1.06 lakh crores which is equal to 3 percent of the GSDP, showcasing the government’s commitment to the path of fiscal consolidation,” he said in the assembly.
“In the budget estimates for 2025-26, the (debt-to-GSDP) ratio is expected to decrease to 26.07 percent of the GSDP well within the target of 28.70 percent for the year 2025-26 prescribed under the 15th Finance Commission,” he asserted.
Amid the row over the New Education Policy (NEP) 2020 and three-language formula with the Centre, Thennarasu informed the assembly that Tamil Nadu would utilise its own finances for the Samagra Shiksha Abhiyan scheme that were withheld by the Centre for not implementing NEP.
The school education department was allocated Rs 46,767 crore for 2025-26, which is Rs 2,727 crore higher than what it had allocated in 2024-2025. To attract the first-generation voters, the government set aside a sum of Rs 2,000 crore to provide laptops or tablets to 20 lakh college students over the next two years.
As for the existing schemes, the state has slightly raised the funds for the Kalaignar Magalir Urimai Thogai Scheme, a monthly financial assistance for women family heads, from Rs 13,720 crore to Rs 13,807 crore, indicating that more beneficiaries who were left out previously would be added to the scheme.
Similarly, the Free Bus Scheme for Women was allocated about Rs 3,600 crore, which is Rs 500 crore higher than the previous year.
With an eye on women votes, the government has allocated Rs 225 crore to train and fund one lakh women as entrepreneurs with loans up to Rs 10 lakh with 20 percent subsidies. Focusing on women, it has also cut the property registration fee by 1 percent if the properties are registered in the women’s name.
In CM M.K. Stalin’s quest to prove the ancientness of Tamil, about Rs 7 crore has been earmarked for archaeological xcavation and scientific research at Keezhadi in Sivaganga district, Pattanamarudur in Thoothukudi district, Karivalamvanthanallur in Tenkasi district, Nagapattinam in Nagapattinam district, Manikkollai in Cuddalore district, Adichanur in Kallakurichi district, Vellalur in Coimbatore district, and Thelunganur in Salem district
For the first time ever since DMK came to power in 2021, Finance Minister announced the government’s plan to conduct a series of deep-sea archaeological excavations along the coast of Tamil Nadu to bring out the maritime trade excellence of the ancient Tamils with Southeast Asia, the Mediterranean region, the Arabian Peninsula, and the Roman Empire.
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Fiscal health
The finance minister projected the state’s own tax revenue to grow at 14.60 percent and the total revenue receipts to increase by 12.81 percent in 2025-26 compared to the previous year.
According to the finance minister, in 2025-26, the state’s own tax revenue was Rs 1.92 lakh crore, which was about Rs 3,000 crore less than what it was projected in the previous budget. In the budget estimates of 2025-26, the state’s own tax revenue is projected at Rs 2.20 lakh crore, which includes 1.63 lakh crore of commercial taxes, Rs 26,109 crore for stamps and registration, Rs 13,441 crore for motor vehicle taxes and Rs 12,944 crore for excise.
“Taking into account the growth in state’s economic activity, the revision of taxes and improvement in collection efficiency, the state’s own tax revenue is estimated to grow at 14.60 percent in 2025-26,” the minister said in the assembly.
Although there was about Rs 6,000 crore difference in the 2024-25 budget estimates and revised estimates, the government was confident that the revenue receipts would increase by 12.81 percent in the current fiscal.
Total revenue receipts in the revised estimates is projected to be Rs 2.93 lakh crore, while the 2024-25 budget estimates was Rs 2.99 lakh crore. “In 2025-26, the total revenue receipts are projected at Rs 3.31 lakh crore, which is an increase of 12.81 percent over the revised estimates (of 2024-25),” Thennarasu said in the assembly.
Despite the increase in the share of the central taxes estimated and revised for the year 2024-25, the finance minister slammed the Centre for its unfair share of central taxes.
The share in central taxes, he said, has been estimated at Rs 52,491 crore in the revised estimates compared to Rs 49,755 crore in the budget estimates of 2024-25.
“While there is an increase owing to the higher tax collections by the Union government, it continues to be far lesser than what should accrue to the State for the indiscriminate levy of cess and surcharges,” the finance minister said.
Stating that the share in central taxes is estimated at Rs.58,022 crore in the budget estimates 2025-26, based on the Union Government’s budgetary allocation, he said that the 4 percent share in central taxes is a gross injustice to the state in comparison to its contribution of 9 percent to the nation’s economy and 6 percent of the country’s population.
Infrastructure, education dominate budget
Earlier, Thennarasu presented the budget stating the future must be guided by the pride of Tamil heritage and cutting-edge technology. A budget of Rs 63,246 crore was allocated for the ongoing Chennai Metro Rail Phase-II project and Rs 20,722 crore for highways department to improve the road infrastructure.
The minister also announced a new airport at Rameshwaram in Ramanathapuram district.
He further announced that a global city near Chennai would come up with about 2,000 acres of land which would serve as a hub for IT, Fin-Tech and urban living apart from other amenities.
The industries department was allocated about Rs 3,915 crore, including Rs 400 crore for Tidel Park in Hosur and Rs 500 crore for five years to launch a semiconductor hub. Chennai will have a fabless lab for which Rs 100 crore was allocated.
While school education got about Rs 46,767 crore (about 14 percent of the total budget), higher education gets about Rs 8,494 crore along with an additional of Rs 500 crore to upgrade Anna University.
The government has also taken note of the declining number of candidates clearing the UPSC exams and have announced a financial assistance of Rs 50,000 to those who clear the civil mains exams. Earlier, it has been giving Rs 25,000 to the UPSC aspirants who clear the prelims.
For rural development, the government allocated about Rs 29,465 crore, including Rs 3,500 crore to build 1 lakh houses to people in the rural area under the Kalaignar Kanavu Illam scheme, and Rs 2,200 crore to lay roads for about 6,100 km in the rural areas.
Opinions divided
Expert opinions were divided over the last full budget presented by the DMK government, with one section of political commentators observing that it showcased the party’s confidence in getting a second term. However, industrialists point to the lack of a solution for the immediate problems.
“Although it has schemes focusing on women entrepreneurship and attracting a section of the college students, there is not one scheme that caters to the larger population. The budget is largely futuristic with a major boost for infrastructure without considering the election scheduled to happen next year. Hence, it shows that the party is confident of their support in the state,” Nelson Xavier, an independent policy researcher, said.
Association of Indian Entrepreneurs national chairman K.E. Raghunathan felt that the budget lacked clarity and vision when it came to the immediate problems such as inflation, fate of the loans and interests that the MSMEs got from different banks.
“It does not address the current problems including the issues faced by the MSMEs. For example, when they say women entrepreneurs would be trained and given loans to start their own businesses, but, how would they choose those women and what business would they encourage, is not there. Similarly, there are some repetitions of the central schemes including the subsidy provided for the gig workers to purchase e-vehicles,” Raghunathan said.
Meanwhile, the prime opposition party All India Anna Dravida Munnetra Kazhagam (AIADMK) as well as the Bharatiya Janata Party (BJP) walked out of the assembly rejecting the budget in protest over the alleged corruption in Tamil Nadu State Marketing Corporation Limited (TASMAC) of over Rs 1000 crore citing to the recent raid by ED at TASMAC office.
Speaking to the media, AIADMK general secretary Edappadi K Panaliswami, popularly called EPS, alleged that the DMK hasn’t announced any new schemes in the last four years.
“But, this time they have announced some new schemes. Where will they go for funds for the new schemes?,” EPS questioned and alleged that all the announcements in the budget were done only for namesake.
(Edited by Tony Rai)
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