The ruling Tamilaga Vettri Kazhagam (TVK) government on Wednesday presented its maiden Budget for 2026-27, outlining a roadmap to transform Tamil Nadu into a USD 1.5 trillion economy by 2036 with a focus on regional development, job creation, infrastructure and artificial intelligence, while acknowledging the state’s strained finances and mounting debt.

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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 seeks to balance welfare spending with fiscal prudence in a high-debt environment while delivering on several promises made by the two-year-old party in its election manifesto.

Among the flagship announcements, the government allocated ₹1,300 crore for two gold assistance schemes. Of this, ₹812 crore has been earmarked for ‘Annan’s Seer’, under which brides will receive an 8-gram gold coin and a silk saree on their wedding day. Another ₹ 560 crore has been allocated for a gold ring scheme for newborns delivered in government hospitals.

The Budget also set aside ₹ 2,000 crore for free distribution of laptops under the Vettri Madikanini Thittam.

Another key focus is artificial intelligence and education. Wilson announced that Tamil Nadu would establish India’s first AI and Innovation City, titled ‘Arivagam’, for artificial intelligence and deep technology development. The project will include a dedicated AI university, an international skill development centre and a semiconductor hardware testing laboratory.

The government also announced the ‘Super Clean, Super Campus’ scheme for 10,000 schools, allocating ₹139 crore in the first phase to ensure daily cleaning, maintenance of drinking water facilities, toilets and security.

The Perunthalaivar Kamarajar School of Excellence, another flagship promise, will comprise modern residential schools for rural students from Classes 9 to 12, providing free education, boarding, food, textbooks and uniforms.

“An amount of ₹125 crore is allocated for the infrastructure development of these schools,” Wilson said.

The Budget also announced branded bicycles for schoolchildren and allocated ₹2,000 crore for the Vetri Laptop Scheme to equip college students with digital learning tools.

A dedicated agency will implement the TN-SUDAR initiative to construct 200 integrated student hostels with one lakh beds under the public-private partnership model at an estimated outlay of ₹3,200 crore.

Education received ₹44,527 crore, the highest allocation among all social sectors.

However, several major poll promises did not find a place in the Budget, including ₹2,500 monthly assistance for women heads of households, distribution of six LPG cylinders, free bus travel for women on state-run buses and a ₹4,000 monthly allowance for unemployed youth.

Referring to the white paper on the state’s finances released in June, Wilson said, “it clearly indicates that Tamil Nadu’s debt has doubled over the past 5 years, reaching out to ₹10 lakh crore.”

He said Tamil Nadu’s fiscal indicators trail those of peer states, including the state’s own tax revenue as a proportion of gross state domestic product, revenue deficit and fiscal deficit.

Interest payments and committed liabilities as a proportion of the state’s total revenue receipts have been rising consistently, leaving limited fiscal space for new schemes and programmes, he said.

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.

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 peg the fiscal deficit at 3% of GSDP for 2026-27.

“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,” he said.

The government plans to borrow ₹1,73,445 crore in 2026-27 while repaying ₹51,971 crore, resulting in a net increase in public debt and liabilities of ₹1,20,964 crore.

“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 said.

Wilson said the liability-to-GSDP ratio is expected to ease to 26.57% in 2027-28 and 26.10% in 2028-29 as part of the state’s fiscal consolidation roadmap.

Revenue receipts are estimated at ₹3,50,027 crore in the revised estimates for 2026-27 and projected to rise to ₹3,95,386 crore in 2027-28. The state’s own revenue is expected to increase from ₹2,54,575 crore to ₹2,88,386 crore during the same period.

To nurture sporting talent, the government announced 10 Olympic Centres of Excellence at an outlay of ₹50 crore.

Wilson said the government is committed to elevating Tamil Nadu to the pinnacle of global sports with the goal of winning Olympic gold medals.

On the industry front, he said the government has signed seven memoranda of understanding worth ₹35,062 crore since assuming office, with the potential to create 14,790 direct and indirect jobs.

Describing the state’s finances, Wilson 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.

“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.