Fiscal Turmoil: Tamil Nadu's Financial Challenges Under Union Policies
Tamil Nadu Finance Minister Thangam Thenarasu presented the 2026-27 Interim Budget, highlighting severe fiscal issues due to Union government actions. Major financial stresses include reduced GST compensation, unexpected deduction of funds, and imposed expenditures, causing significant revenue shortfalls and constrained borrowing capabilities for the state.
- Country:
- India
Tamil Nadu's Finance Minister Thangam Thenarasu has presented a grim outlook in the 2026-27 Interim Budget, blaming the Union government for the state's severe fiscal stress. He accused the central government of destabilizing state finances through actions like GST rate changes without adequate consultation.
The state is facing an estimated revenue shortfall of Rs 9,600 crore this year, exacerbated by central deductions such as a Rs 1,709 crore IGST settlement. Moreover, Tamil Nadu faces further strain due to reduced central tax allocations and additional financial requirements imposed by the Union government.
Despite these fiscal challenges, the Tamil Nadu government remains committed to fulfilling its promises to the public, navigating the tough economic landscape shaped by the Union’s policies. However, significant disputes over withheld central funds, and project costs remain unresolved, complicating the state’s financial health and borrowing capacity.
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