Tamil Nadu Interim Budget 2026-27: Rs 4,000 Crore for Free Bus Travel Scheme, Fiscal Deficit Targeted at 3% of GSDP

Tamil Nadu Interim Budget 2026-27: Rs 4,000 Crore for Free Bus Travel Scheme, Fiscal Deficit Targeted at 3% of GSDP​

Chennai, February 17: Tamil Nadu Finance Minister Thangam Thenarasu on Tuesday presented the Interim Budget for 2026-27 in the state Assembly, allocating Rs 4,000 crore for the fare-free bus travel scheme for women and earmarking funds for key flagship initiatives of the DMK government.

The nearly two-and-a-half-hour-long speech is being seen as one of the lengthiest Budget addresses in recent years, coming ahead of the Assembly elections due in April 2026.

Rs 4,000 Crore for Vidiyal Payanam Scheme​

In the Interim Budget Estimates for 2026-27, the government has allocated:

• Rs 4,000 crore for the Vidiyal Payanam scheme, which provides free bus travel for women beneficiaries
• Rs 1,782 crore towards the student bus fare scheme
• Rs 1,857 crore for diesel subsidy

Overall, the Transport Department has been allocated Rs 13,062 crore in the Interim Budget.

To improve operational efficiency and financial stability of state transport corporations, the government has created a Viability Gap Fund with a corpus of Rs 2,000 crore, aimed at providing performance-based incentives.

Social Security Allocation and Fiscal Estimates​

For social security schemes, the minister announced a total allocation of Rs 5,463 crore.

On the fiscal front, the Revenue Deficit for 2026-27 is estimated at Rs 48,696.32 crore.

The Fiscal Deficit is projected to reduce to 3 per cent of Gross State Domestic Product, reflecting what the government described as its commitment to fiscal consolidation despite economic and fiscal challenges.

The state plans to borrow Rs 1,79,809.65 crore during 2026-27 and repay Rs 60,413.42 crore. As a result, outstanding borrowing as of March 31, 2027 is projected to stand at Rs 10,71,770.34 crore.

Allegations Against Union Government​

During his address, Thenarasu alleged that the Union government had made efforts that could artificially precipitate a fiscal crisis in Tamil Nadu.

He said that in a federal system, states had previously faced unfair treatment, but described the current challenges as unprecedented. He cited denial of sanction for major infrastructure projects, withholding of funds for centrally sponsored schemes, curtailment of tax revenues without consultation, and imposition of expenditure conditions as key issues.

Concerns Over 16th Finance Commission​

Referring to the 16th Finance Commission report, the minister termed it disappointing for Tamil Nadu.

He noted that while states had sought a higher share in the divisible pool of central taxes, the Commission recommended retaining the share at 41 per cent. He also expressed concern that issues related to increasing cesses and surcharges were not reflected in the recommendations.

Chennai Metro Phase II Progress​

The second phase of the Chennai Metro Rail Limited project, covering 118.9 km across three corridors at an estimated cost of Rs 63,246 crore, is progressing.

Regulatory clearances from the Railway Board for commissioning the first stage of Phase II and the metro corridor from Poonamallee bypass to Porur are expected soon. The 14.6 km stretch, comprising 11 stations, will integrate with the existing metro line at Vadapalani and is expected to open for public use shortly.

The minister said the state government continues to urge the Union government to approve Metro Rail projects in Coimbatore and Madurai, similar to other cities.

With Assembly elections due in April 2026, the Interim Budget outlines welfare allocations, infrastructure push, and fiscal targets that set the tone for the state’s financial roadmap in the coming year.