The Tamilaga Vettri Kazhagam (TVK) government on Wednesday presented its first Budget for 2026-27, laying out its vision to transform Tamil Nadu into a USD 1.5 trillion economy by 2036. The Budget focuses on regional development, employment generation, infrastructure, education and artificial intelligence. At the same time, it acknowledges the state's challenging financial situation, rising debt and limited fiscal space for new spending.

Presenting his maiden Budget in the Assembly, Finance Minister N Marie Wilson said, “This government is committed to making the necessary social, economic and human capital investments in Tamil Nadu which has for many years been a leading State on socio-economic indicators in India - into a poverty free, prosperous State that offers equal opportunity to all and upholds social justice, and to propel the State into a USD 1.5 trillion economy by the year 2036.”

The Budget aims to maintain a balance between welfare spending and financial discipline. It also includes several promises made by the two-year-old TVK government during the Assembly elections. However, a few key promises have not been included in this year's Budget.

One of the major welfare announcements is the allocation of ₹1,300 crore for two gold assistance schemes. Out of this, ₹812 crore has been set aside for the 'Annan's Seer' scheme. Under the scheme, brides will receive an 8-gram gold coin and a silk saree on their wedding day. The government has also allocated ₹560 crore for a scheme that will provide a gold ring to newborns delivered in government hospitals.

The government has also announced ₹2,000 crore under the Vettri Madikanini Thittam for the free distribution of laptops. In another initiative, branded bicycles will be distributed to schoolchildren. The Budget also allocates ₹2,000 crore for the Vetri Laptop Scheme to provide college students with digital learning tools and improve access to technology.

Artificial intelligence and advanced technology have received significant attention in the Budget. The government announced that Tamil Nadu will establish India's first AI and Innovation City named 'Arivagam'. The project will focus on artificial intelligence and deep technology. It will include a dedicated AI university, an international skill development centre and a semiconductor hardware testing laboratory. The initiative aims to strengthen research, innovation and skilled workforce development in emerging technologies.

Education remains one of the biggest priorities in the Budget. The government has allocated ₹44,527 crore to the sector, the highest among all social sectors. A new 'Super Clean, Super Campus' scheme will be launched in 10,000 schools. The first phase has received ₹139 crore to improve daily cleaning, drinking water facilities, toilets and campus security.

The Budget also includes the Perunthalaivar Kamarajar School of Excellence, another important election promise. These will be modern residential schools for rural students studying in Classes 9 to 12. Students will receive free education, accommodation, food, textbooks and uniforms. Wilson said, “An amount of ₹125 crore is allocated for the infrastructure development of these schools.”

To improve student accommodation, the government will establish a dedicated agency to implement the TN-SUDAR initiative. Under the public-private partnership model, 200 integrated student hostels with one lakh beds will be constructed at an estimated cost of ₹3,200 crore. The project aims to improve access to quality hostel facilities for students across the state.

Despite announcing several welfare measures, the government did not include some major election promises in the Budget. These include a monthly financial assistance of ₹2,500 for women heads of households, six free LPG cylinders, free bus travel for women in state-run buses and a monthly unemployment allowance of ₹4,000 for unemployed youth.

Wilson referred to the white paper on the state's finances released in June and highlighted the financial challenges facing Tamil Nadu. He said, “it clearly indicates that Tamil Nadu’s debt has doubled over the past 5 years, reaching out to ₹10 lakh crore.” He added that Tamil Nadu's fiscal indicators remain weaker than several comparable states. These include the state's own tax revenue as a share of Gross State Domestic Product (GSDP), revenue deficit and fiscal deficit. He also said interest payments and committed liabilities continue to rise, leaving limited financial room for introducing new schemes.

Giving details of the state's finances, Wilson said, “the revenue deficit in the revised budget estimates for 2026-27 is estimated at ₹55,775 crore.” He further said, “On the strength of revenue augmentation measures, including improved tax administration and collection efficiency, it is expected to narrow to ₹53,933 crore in 2027-28 and further to ₹51,058 crore in 2028-29, thereby creating additional space for capital expenditure.”

The revised Budget estimates place the fiscal deficit at 3 per cent of GSDP for 2026-27. Wilson said, “In the forthcoming years, the fiscal deficit to GSDP ratio is projected to be 2.87 per cent in 2027-28. In 2028-29, it is estimated to further reduce to 2.80 per cent.” The government plans to borrow ₹1,73,445 crore during 2026-27 and repay ₹51,971 crore. This will lead to a net increase in public debt and liabilities of ₹1,20,964 crore.

Wilson added, “As a result, the outstanding liabilities as on March 31, 2027 will be ₹10,98,768 crore, amounting to 27.01 per cent of GSDP in 2026-27.” He also said the liability-to-GSDP ratio is expected to decline to 26.57 per cent in 2027-28 and further to 26.10 per cent in 2028-29 as part of the government's fiscal consolidation plan.

The Budget estimates revenue receipts at ₹3,50,027 crore for the revised estimates of 2026-27. These are projected to increase to ₹3,95,386 crore in 2027-28. The state's own revenue is also expected to rise from ₹2,54,575 crore to ₹2,88,386 crore during the same period through better revenue generation and improved tax collection.

The government also announced measures to promote sports. It will establish 10 Olympic Centres of Excellence with an allocation of ₹50 crore. Wilson said the government aims to make Tamil Nadu a leading sporting state and is committed to helping athletes win Olympic gold medals.

On industrial development, Wilson said the government has signed seven memoranda of understanding worth ₹35,062 crore since coming to power. These investments have the potential to generate 14,790 direct and indirect jobs across the state.

Describing the current financial situation, Wilson said the state's finances remain under pressure. He said the fiscal position remained in the “red” and the treasury was burdened with debt and suboptimal income. “The repair has been started, but would need at least 2 years to bring the financial administration back to the track of fiscal prudence,” he said.

Concluding his Budget speech, Wilson said, “Tamil Nadu would emerge as a state that has fiscally prudent governance for balanced and inclusive economic growth...Our government believes that we need to look forward to at least 15 years of sustained growth through consistent policies and providing clean and efficient governance,” he added. The Budget presents a long-term development plan with a strong focus on technology, education, welfare and financial discipline while setting the foundation for achieving the state's 2036 economic target.