Finances stable, but freebies might hamper Tamil Nadu's fiscal maths

The Tamilaga Vettri Kazhagam’s (TVK’s) election manifesto revolved around a mix of development projects and freebies aimed at women, youth and the vulnerable sections of society. However, fulfilling all the freebie promises might strain Tamil Nadu’s fiscal position, which has remained largely stable after the Covid-19 pandemic.

 

The manifesto promised a ₹2,500 monthly assistance to all women heads of families; a ₹15,000 annual payment to every mother or guardian to prevent school dropouts; unemployment assistance for graduates and diploma holders; loan waivers for cooperative crop loans; and a ₹30,000 annual transfer to weaver families.

 

While the fiscal deficit is currently low, these promised sops are projected to increase it in the coming years. The revised estimates for 2025-26 (FY26) have already shown a slight rise in the fiscal deficit. Although the budget estimates for FY27 foresee a fiscal deficit of 3 per cent, this appears unlikely.

 

A similar trend is visible in the revenue deficit, as the revised estimates suggest a revenue deficit of 1.94 per cent of GSDP in FY26, up from 1.47 per cent in FY25.