Tamil Nadu Budget Analysis 2025-26

The Finance Minister of Tamil Nadu, Mr. Thangam Thennarasu, presented the Budget for the state for the financial year 2025-26 on March 14, 2025.

Budget Highlights

The Gross State Domestic Product (GSDP) of Tamil Nadu for 2025-26 (at current prices) is projected to be Rs 35,67,818 crore, amounting to growth of 15% over the revised estimates of 2024-25.
Expenditure (excluding debt repayment) in 2025-26 is estimated to be Rs 4,39,293 crore, an increase of 10% from the revised estimates of 2024-25. In addition, debt of Rs 47,040 crore will be repaid by the state.
Receipts (excluding borrowings) for 2025-26 are estimated to be Rs 3,32,325 crore, an increase of 12% as compared to the revised estimate of 2024-25.
Revenue deficit in 2025-26 is estimated to be 1.2% of GSDP (Rs 41,635 crore), as compared to a revenue deficit of 1.5% of GSDP (Rs 46,468 crore) at the revised estimate stage in 2024-25.
Fiscal deficit for 2025-26 is targeted at 3% of GSDP (Rs 1,06,968 crore). In 2024-25, as per the revised estimates, fiscal deficit is expected to be 3.3% of GSDP, slightly lower than the budgeted 3.4% of GSDP.

Policy Highlights

Water supply: A new project will be implemented to connect all the water distribution stations and ensure equitable distribution of water supply in Chennai. This project will be implemented over the next three years at an estimated cost of Rs 2,423 crore.
Urban development: A new city featuring IT parks, fin-tech trade zones, research and development centres, banking and insurance firms, along educational and healthcare facilities will be developed over an area of 2,000 acres near Chennai.
Nutrition: The Chief Minister’s Breakfast scheme has been expanded to provide breakfast for students in urban government aided schools. This is expected to benefit an additional 3.14 lakh students. The total allocation for this scheme is Rs 600 crore.
Industry: The ‘Tamil Nadu Semiconductor Mission – 2030’ will be implemented over the next five years at a cost of Rs 500 crore. Semiconductor design companies and domestic start-ups will be encouraged to establish their design centres in Tamil Nadu.

Tamil Nadu’s Economy

GSDP: In 2023-24, Tamil Nadu’s GSDP (at constant prices) is estimated to grow by 8.2% over the previous year. In comparison, India’s GDP is estimated to grow by 9.2% in 2023-24. In 2023-24 agriculture, manufacturing and service sectors are expected to grow by 3.9%, 7.3%, and 9.3% respectively in real terms.
Sectors: In 2023-24, agriculture, manufacturing, and services sectors are estimated to contribute 13%, 33%, and 54% of Tamil Nadu’s economy, respectively (at current prices).
Per capita GSDP: In 2023-24, Tamil Nadu’s per capita GSDP (at current prices) is estimated to be Rs 3,53,483 an increase of 13% over the previous year. In 2023-24, India’s per capita GDP is estimated to be Rs 2,15,935, an increase of 11% over the previous year.

Figure 1: Growth in Tamil Nadu’s GSDP at constant prices (2011-12)

Note: These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation.
Sources: MoSPI; PRS.