Launching a frontal attack on the Modi government ahead of the assembly elections, Tamil Nadu Finance Minister Thangam Thennarasu on Tuesday charged it with squeezing the state’s finances by denying the legitimate share of funds to the State.
“The Union appears to leave no stone unturned to artificially precipitate a fiscal crisis in Tamil Nadu,” Thennarasu said, presenting the Interim Budget for 2026-27 in the state assembly.
“In a federal polity, there have been several instances in the past where states have been unfairly treated by the Union government. However, I firmly believe that the extent of challenges faced by this government is unprecedented,” he said, adding that in every field, be it denial of sanction of major infrastructure projects for the state of Tamil Nadu, withholding of release of funds for Centrally-Sponsored Schemes, curtailments of tax revenues without due consultation, or unfair imposition of conditions to mandate expenditure, the Modi government is squeezing the state.
At a time when all state governments are under pressure due to rising expenditure commitments, Tamil Nadu is further being denied the funds legitimately due to it like the Rs 3,548 crore under the SSA programme, Rs 3,112 crore under Jal Jeevan Mission and Rs 2,246 crore Finance Commission Grants. Further, GST rationalisation, hurriedly carried out without considering the opposition from several states, and the termination of GST compensation regime has resulted in a revenue shortfall of around Rs 9,600 crore in the current financial year alone, he explained.
In April last, Rs 1,709 crore for IGST settlement was deducted from the State’s account in the Reserve Bank of India without intimation or consultation, he pointed out. The Finance Minister also drew attention to the fact that the share of Central Taxes allocated to the State in the Union Budget has been reduced, resulting in an unanticipated shortfall of Rs 1,202 crore.
Based on the Union Budget, in the Interim Budget, Tamil Nadu’s share in Central Taxes is estimated at Rs 62,530.65 crore as against the Rs 56,819.23 crore in the Revised Estimates of 2025-26. The share in Central Taxes is projected to be Rs 71,284.94 crorein 2027-28 and Rs 81,264.83 crore the next year, assuming an annual growth rate of 14 percent. The total Revenue Expenditure has increased from 3,73, 204 crore in 2025-26 Budget estimates to Rs,3,78,917 crore in the Revised Estimates.