Centre trying to create fiscal crisis for Tamil Nadu: State finance minister Thangam Thenarasu in Assembly

Chennai: Tamil Nadu finance minister Thangam Thenarasu on Tuesday accused the Centre of creating "unprecedented" challenges for the state government, such as denial of sanction for major infrastructure projects, blocking of funds, curtailment of tax revenue and imposition of unfair conditions on expenditure.

"The Union government appears to leave no stone unturned to artificially precipitate a fiscal crisis in Tamil Nadu," Thenarasu said in his budget speech. The Centre's actions have a destabilising impact on the state finances, but despite challenges, the MK Stalin government met every promise it made to the people, he claimed.

The Tamil Nadu government's outstanding debt, according to the budget estimates, would be ₹10.71 lakh crore for 2026-27, compared with the revised estimate of ₹9.52 lakh crore for 2025-26 and the projection of ₹9.29 lakh crore when the budget was presented last year, he said.


The minister listed GST rate recast among the biggest challenges. He claimed this was approved by the GST Council without considering the apprehensions and opposition recorded by several states. For Tamil Nadu, the revenue shortfall from this is estimated to be around ₹9,600 crore in FY26, he said.

In April 2025, the Union government deducted ₹1,709 crore for IGST settlement from the state's account in Reserve Bank of India without due intimation or consultation, the minister said. Also, the share in central taxes allocated to the state in the Union budget 2025-26 was reduced in the revised estimates, causing an unanticipated shortfall of ₹1,202 crore for the state government, Thenarasu said.