Tamil Nadu’s Growth Rate Exceeds National GDP
The State will strive to sustain healthy growth in Revenue Receipts and with fiscal consolidation as its core principle
Chennai: Tamil Nadu’s growth rate, in the present economic context, exceeds that of the national GDP, which is an encouraging development that is anticipated to persist in the forthcoming year and its revenue collection will improve by undertaking measures such as enhancing resources and improving the efficiency of collection methods.
The State will strive to sustain healthy growth in Revenue Receipts and with fiscal consolidation as its core principle, it will continue to comply with TNFRA norms, thereby facilitating greater investment and expenditure in areas focused on growth and welfare.
In the Interim Budget Estimates 2026-27, an amount of Rs 59,561.72 crore is allocated for Capital Expenditure as against Rs 51,442.93 crore in the Revised Estimates 2025-26, which shows an increase of 15.78 per cent. In line with the Government’s push for capital expenditure, which is projected to be Rs 74,452.15 crore in 2027-28 and Rs 93,065.19 crore in 2028-29. This shows the commitment of the State to constantly improve the allocation for growth-oriented expenditure while maintaining fiscal discipline.
The net loans and advances are estimated at Rs 13,708.32 crore in the Interim Budget Estimate 2026-27. This is projected to increase to Rs 16,449.98 crore in 2027-28 and to Rs 19,739.98 crore in 2028-29 in light of the new Metro Projects that have been announced by the Government.
While the Revenue Deficit in the Interim Budget Estimates for 2026-27 is estimated at Rs 48,696.32 crore, the revenue augmentation measures including improvement in tax administration and collection efficiency are expected to reduce it to Rs 42,964.61 crore in 2027-28 and subsequently to Rs 35,115.33 crore in 2028-29, creating additional space for capital expenditure.
In the Interim Budget Estimates for 2026-27, the Fiscal Deficit is estimated to reduce to 3.00 per cent of GSDP, showcasing the Government’s commitment to the path of fiscal consolidation despite several challenges faced on the economy and fiscal fronts. In the coming years, Fiscal Deficit to GSDP ratio is projected to be 2.89 per cent in 2027-28 and 2.80 per cent in 2028-29, which are within the targets fixed under Tamil Nadu Fiscal Responsibility Act 2003.
The estimates for receipt and repayment of borrowings have been finalized on the basis of overall borrowing ceiling fixed by the Union Government and the Government plans to borrow a total amount of Rs 1,79,809.65 crore during 2026-27 and make repayment of Rs.60,413.42 crore. As a result, the outstanding borrowing as on 31st March 2027 will be Rs 10,71,770.34 crore. This constitutes 26.35 per cent of GSDP in 2026-27. However, this includes an amount of Rs 9,522.65 crore which should reflect in the accounts of the Union Government after the approval of Chennai Metro Rail Phase – II project as a Central Sector Project.
Excluding this amount, the outstanding debt to GSDP is 26.12 per cent in the Interim Budget Estimates 2026-27. The Outstanding debt excluding the loan towards Chennai Metro Rail Project -II as a percentage of GSDP is expected to further reduce to 25.80 per cent in 2027-28 and 25.43 per cent in 2028-29. Therefore, the State aims tomaintain debt sustainability as part of its fiscal consolidation roadmap.
The outstanding guarantees for each year have to be restricted at a level of 100 per cent of the Total Revenue Receipts in the preceding year or 10 per cent of the GSDP, whichever is lower. The outstanding guarantees as on31st March, 2025 were 54.80 per cent of total revenue receipts in the preceding year and 4.65 per cent of GSDP.
The outstanding risk weighted guarantees for each year have to be kept at a level of 75 per cent of the total Revenue Receipts of the preceding year or 7.5 per cent of GSDP, whichever is lower. The outstanding risk weighted guarantees as on 31 March, 2025 stood at 20.16 per cent of Total Revenue Receipts of the preceding year and 1.71 per cent of GSDP.