Budget 2026: Interest Payments Rising, Govt Says Fiscal Space for New Schemes Shrinking

Chennai: Interest payments and committed liabilities as a proportion of the state's total revenue receipts have been rising consistently, Tamil Nadu Finance Minister N Marie Wilson said on Wednesday.

Presenting the Revised Budget Estimates for 2026-27 in the Assembly, the minister said immediately upon assuming office, the TVK government released the "White Paper on Financial Management" clearly indicating that Tamil Nadu's debt has doubled over the past five years, reaching about Rs 10 lakh crore.

Further, Tamil Nadu has recorded fiscal indicators that trail behind other peer states, including state's Own Tax Revenue as a proportion of Gross State Domestic Product (GSDP), Revenue Deficit and Fiscal Deficit.

He said: "Interest payments and committed liabilities as proportion of the state's Total Revenue Receipts, have been rising consistently, leaving limited fiscal space for new schemes and programmes."

In these challenging circumstances, the government is working on fulfilling its commitments to the public in a phased manner, while also taking various measures to recover the state from tight fiscal position.

Firstly, the practice of requiring mandatory submission of unnecessary certificates by contractors in public tenders that had made tenders non-competitive and it has now been abolished bringing transparency to the tendering process.

Secondly, the government has discontinued the prevailing system of restricting tender eligibility to the department's own registered contractors and now, contractors registered with any government department may bid for tenders issued by any other department, subject to the prescribed pre-qualification criteria.

Thirdly, to encourage young entrepreneurs and small businesses to bid for government tenders for the first time, eligibility criteria for low-value procurements have been relaxed, giving new and emerging contractors easier access to government tenders.

He said: "The resulting increase in competition is expected to bring greater efficiency to procurement and reduce fruitless expenditure. I am happy to inform this distinguished House that these initiatives have already begun to yield positive results, delivering significant cost savings for the state."