Tamil Nadu's interim budget for 2026-27, presented as the last of the DMK government's current term, emphasizes social justice, industrial growth and a one-trillion-dollar economy goal by Finance Minister Thangam Thennarasu. It argues that high growth and high redistribution can coexist. The budget criticizes the central government for financial hurdles while allocating funds to key schemes ahead of elections.
On Tuesday, February 18, 2026, Tamil Nadu Finance Minister Thangam Thennarasu presented the state's interim budget for 2026-27 worth ₹2.55 lakh crore in the assembly, allocating funds to key schemes ahead of elections. The budget blends welfare initiatives like the Kalaignar Magalir Urimai Thittam and Vidiyal Payanam free bus scheme with industrial ambitions.
Invoking poet Thiruvalluvar and recalling former Chief Minister M Karunanidhi's 1971 advice, Thennarasu stated: “The focus should be on identifying the means to mobilise the necessary financial resources for a well-conceived plan, rather than reducing plan expenditure or slowing the pace of development.” Tamil Nadu recorded 11.19% economic growth in 2024-25, topping major states, and contributes 41.23% to India's electronics exports.
It highlighted 1,179 investment MoUs worth ₹12.37 lakh crore, promising 36 lakh jobs. Industrial plans include 54 operational SIPCOT parks across 49,468 acres, a ₹5,200-crore shipbuilding cluster in Thoothukudi, and new TIDEL parks in tier-two cities. Welfare measures provide ₹1,000 monthly to 1.31 crore women under Kalaignar Magalir Urimai Thittam, with a recent ₹5,000 one-time credit. The Vidiyal Payanam scheme has enabled 881 crore trips, saving women an average ₹888 monthly. Social security pensions cover 35.33 lakh beneficiaries with ₹5,463 crore.
Allocations include ₹48,534 crore for school education, ₹22,090 crore for health, and ₹8,505 crore for higher education. The Chennai Metro Phase II, costing ₹63,246 crore for 118.9 km, is progressing, though the state accused the Union government of delaying approvals for Coimbatore and Madurai metros. On climate, Tamil Nadu ranked first in the NITI Aayog SDG Index 2023-24 and plans 100 billion units of renewable energy, with ₹18,091 crore to the energy department.
Thennarasu criticized the central government for withholding funds and unfair tax devolution. The 16th Finance Commission was termed disappointing, with Tamil Nadu's share growing by just 0.44%, compared to 23.7% for Kerala and 13.2% for Karnataka. Opposition leaders reacted: AIADMK chief Edappadi K Palaniswami called it “lacking substance” amid rising fiscal deficit to ₹1.22 lakh crore; BJP's Narayanan Thirupathy labeled it “deceptive self-promotion.” The budget seeks to balance industrial dynamism with social protection in an election year.
