Amid evolving Centre-state dynamics, Tamil Nadu reinforces its role as a progressive, self-reliant state contributing to the national economy while seeking greater financial autonomy.
Published Mar 15, 2025 | 12:06 PM ⚊ Updated Mar 15, 2025 | 12:06 PM
Tamil Nadu Finance Minister Thangam Thenarasu presenting the state budget.
Synopsis: Tamil Nadu’s 2025 budget emphasises financial autonomy, cultural preservation, and self-sustained growth. Despite losing central funds, the state increased allocations for Tamil development, education, and women’s empowerment. The budget reflects defiance against Union policies, prioritising key sectors like infrastructure, industries, and social welfare. It signals Tamil Nadu’s commitment to fiscal discipline while advocating for greater financial autonomy from the Centre.
Tamil Nadu Finance Minister Thangam Thennarasu, while presenting the 2025 State Budget on Friday, 14 March, stated, “Even at this critical juncture, the people of Tamil Nadu have wholeheartedly rallied behind the Chief Minister for upholding the dignity of the state by standing firm on the bilingual policy, even at the cost of foregoing two thousand crore rupees.”
The finance minister’s statement referred to the ₹2,152 crore withheld by the Union Government under the Samagra Shiksha Abhiyan scheme.
At a time when tensions between the Tamil Nadu government and the Union government are escalating over multiple issues, including the three-language policy, Hindi imposition, and financial devolution delays, the budget presented is more than just an economic document. It is being viewed as a political assertion.
From the very outset, the budget signalled its defiance. Unlike the official ₹ (rupee symbol), the Tamil Nadu government had deliberately chosen to use ‘ரூ’ (the Tamil word representing rupee) in its official budget presentation.
This seemingly small but symbolic move underscores the Dravidian model’s unwavering commitment to Tamil identity and self-respect.
With the 2025 budget, the Tamil Nadu government is reshaping its approach to long-standing disputes with the Centre by strategically investing in key sectors.
Rather than escalating conflicts, the state is working towards reducing its dependence on Union government support by strengthening Tamil development, education, urban infrastructure, transport, industries, and MSMEs.
This investment-driven strategy reflects a vision for a self-sustaining Tamil Nadu, where the state takes charge of its own growth and development, lessening its financial reliance on central allocations.
But does this budget deliver on its promises? Has the government effectively addressed public demands, or is the opposition justified in claiming that key concerns have been ignored? Most importantly, what message does this budget send to the rest of India?
Let’s delve deeper into the numbers, policies, and political implications of Tamil Nadu’s 2025 Budget.
The most significant ongoing battle between the Tamil Nadu government and the Union government revolves around language.
The Tamil Nadu government has accused the Union government of attempting to suppress Tamil through the New Education Policy by imposing the three-language formula.
This dispute has intensified in the current parliamentary session, with multiple debates centring on Tamil language and Tamil Nadu’s rights.
The controversy reached a tipping point when BJP MP Nishikant Dubey claimed Sanskrit was older than Tamil, igniting a nationwide debate on Tamil’s historical significance.
As a resounding response to these challenges, the Tamil Nadu government has increased the budget for Tamil development and culture by an unprecedented 404.88 percent compared to last year. From ₹21.65 crore in 2024, the allocation has skyrocketed to ₹109.3 crore in 2025.
This massive investment goes beyond mere numbers—it is a statement of Tamil Nadu’s unwavering commitment to its linguistic and cultural heritage. The budget includes initiatives such as:
This significant budget increase is seen as the next phase of Tamil Nadu’s linguistic resistance against the Union government, reinforcing its resolve to uphold Tamil identity and self-respect at any cost.
The conflict over education between the state and central governments has persisted for nearly a century. It began in 1938 with the first language struggle when Hindi was made compulsory in Tamil Nadu schools. Today disputes over the three-language policy, the imposition of Hindi, and the rejection of the New Education Policy (NEP) continue to fuel tensions between the two governments.
Taking this tension to the next level, Union Finance Minister Dharmendra Pradhan openly stated that Tamil Nadu would receive education funding only if it implemented the NEP. As mentioned earlier, the Union Government has also withheld ₹2,152 crore allocated to Tamil Nadu under the Samagra Shiksha Abhiyan scheme.
In response, the Tamil Nadu government has significantly increased its allocation for school education in this year’s budget, raising it by ₹2,725 crore to a total of ₹46,767 crore, compared to last year’s ₹44,042 crore.
Minister Thennarasu, quoting poet Bharathidasan’s words, noted “Any opposition to a Tamilian working for the betterment of the Tamil community will eventually crumble and fail, even if it is as mighty as a mountain”
Asserted that despite losing ₹2,000 crore in central funds, the state would not compromise on its two-language policy, the minister made it clear that if the Union Government withholds funds, Tamil Nadu will allocate its own resources to support its students and teachers.
This year, the overall education budget stands at ₹55,261 crore, reflecting a ₹3,007 crore increase from last year’s ₹52,254 crore. Tamil Nadu’s strong response underscores its commitment to achieving a self-sustainable education system.
It also sends a clear message to the Union Government, Tamil Nadu will never compromise on its educational policies and principles, no matter the cost.
The government also announced new Government Arts and Science Colleges in 10 more cities including Tuticorin.
Additionally, 20 lakh college students will be provided with a tablet or laptop of their choice over the next two years, to equip them with AI skills and enhance their global competitiveness.
Before the budget was presented, there was widespread speculation that being the last full budget before the 2026 elections, the Tamil Nadu government would introduce major new schemes and large-scale announcements.
However, the DMK government has taken a measured and diversified approach, focusing on strengthening existing programs, strategic sectoral investments, and long-term development rather than headline-grabbing promises.
The budget reflected Tamil Nadu’s commitment to urban transformation, industrial expansion, agricultural resilience, water security, entrepreneurship, and social welfare, ensuring a holistic growth trajectory for the state.
Tamil Nadu, a rapidly urbanising state, faces pressing challenges in infrastructure, housing, and public services. Yet, the government’s decision to cut the urban development budget from ₹41,733 crore to ₹34,396 crore raises concerns about the state’s preparedness for this growth.
While ambitious projects like a 2,000-acre “Global City” near Chennai, metro rail expansion, and water security initiatives have been announced, this reduction risks slowing down critical urban upgrades.
At the same time, the state is accelerating industrial expansion:
While the budget prioritises long-term economic expansion, Tamil Nadu must ensure urban infrastructure investments keep pace with rapid migration.
Tamil Nadu government continues to prioritize women’s empowerment with key welfare schemes like Magalir Urimai Thogai (₹13,087 crore) and Vidiyal Payanam, the free bus travel initiative for women (₹3,600 crore).
In addition, the government has announced several measures aimed at economic empowerment and safety.
A push for financial inclusion targets ₹37,000 crore in bank loans for Self-Help Groups next year. To encourage women’s property ownership, registration fees for assets up to ₹10 lakh will be reduced by one percent for properties registered in women’s names. Additionally, a major entrepreneurship drive aims to empower 1 lakh women in five years with skill development, loans up to ₹10 lakh, and a 20 percent subsidy.
However, when it comes to women’s safety, opposition parties have raised concerns that the government’s budget allocation is inadequate, given the rising crimes.
The state has announced a ₹75 crore women’s safety initiative with advanced surveillance systems in major cities, but critics argue that stronger financial commitments and comprehensive policies are necessary to ensure real protection.
Addressing this gap must be a priority, as empowerment cannot be meaningful without a safe environment for women.
Tamil Nadu is also expanding the Puthumai Penn and Tamil Pudhalvan schemes to provide ₹1,000 monthly scholarships for transgender students in higher education.
In a first-of-its-kind initiative, 50 transgender individuals will be inducted into the Home Guard Force in Chennai, Tambaram, and Avadi for traffic and crowd management, ensuring greater employment opportunities.
To encourage private sector hiring of the differently-abled, firms employing at least 10 transgender individuals will receive a ₹2,000 monthly wage subsidy per employee for one year.
Additionally, a new bill will mandate the representation of persons with disabilities in local government bodies, ensuring their voices are heard in policymaking.
Recognizing the importance of social harmony, the government has announced that, it will award ₹1 crore each to 10 village Panchayats that foster unity and eliminate caste-based discrimination. Under the Chief Minister’s Thayumanavar Thittam, 50,000 orphaned children raised by relatives will receive ₹2,000 monthly support until they turn 18, with further assistance for higher education and skill training.
However, government employees and teachers have expressed disappointment, arguing that the budget did not fully meet their expectations. One of their key demands was the restoration of the Earned Leave Surrender system, which was suspended during the COVID-19 period.
While the government has announced that employees will be able to encash up to 15 days of earned leave starting 1 April 2026, employees have not received leave surrender benefits for the past four years.
Additionally, filling government vacancies and reinstating the old pension scheme remain major demands. Government employees’ associations claim that there are 5.2 lakh vacancies, but the budget has only announced the filling of 40,000 posts.
While Tamil Nadu continues its progressive social welfare measures, the concerns of government employees highlight the need for a more comprehensive approach to workforce policies and financial security.
Here is the breakup of budget allocations, sector-wise, in the last three years.
| No | Sector | 2023
(in cr) |
2024
(in cr) |
2025
(in cr) |
| 1 | School education | 40,299 | 44,042 | 46,767 |
| 2 | Rural development | 22,562 | 27,922 | 29,465 |
| 3 | Urban development | 38,444 | 41,733 | 34,396 |
| 4 | Industries and MSME | 4,778 | 4,481 | 5,833 |
| 5 | Transport | 8,056 | 9,787 | 12,965 |
| 6 | Health | 18,661 | 20,198 | 21,906 |
| 7 | Social Welfare | 7,745 | 7,830 | 8,597 |
| 8 | Adi Dravidar and Tribal
welfare |
3,513 | 370 | 3,924 |
| 9 | Energy | 10,694 | 22,310 | 21,17 |
As per the Tamil Nadu Budget 2025-26, the total revenue receipts are estimated at ₹3,31,569 crore, while the revenue expenditure stands at ₹3,73,204 crore, resulting in a revenue deficit of ₹41,635 crore—a reduction from ₹46,467 crore in the revised estimates for 2024-25.
The capital expenditure is projected at ₹57,231 crore, highlighting the government’s focus on infrastructure and long-term growth.
The fiscal deficit for 2025-26 is estimated at ₹1,06,963 crore (3.00 percent of GSDP), with borrowings amounting to ₹1,62,097 crore, leading to an outstanding debt of ₹9,29,959 crore (26.07 percent of GSDP) by 31 March, 2026.
This remains within the 15th Finance Commission’s prescribed limits. Tamil Nadu has successfully reduced its revenue deficit from 3.28 percent of GSDP in 2020-21 to a projected 1.17 percent in 2025-26, bringing it closer to 2015-16 levels.
The budget also highlighted that the state’s share of central taxes is ₹58,022 crore, an increase from ₹52,491 crore in 2024-25. However, this remains disproportionately low at just 4 percent of total central taxes, despite Tamil Nadu contributing 9 percent to the national GDP and 6 percent to the population.
The budget also points out that the Union Government’s indiscriminate levy of cess and surcharges has further reduced the state’s rightful share in central taxes.
Additionally, the total funds received from the Union Government as a percentage of Tamil Nadu’s GSDP have declined from 3.41 percent in 2016-17 to 1.96 percent in 2024-25, leading to a loss of ₹45,182 crore—which accounts for 44.43 percent of Tamil Nadu’s fiscal deficit in 2024-25.
Despite these financial challenges, Tamil Nadu remains committed to fiscal discipline, steadily reducing its revenue and fiscal deficits while continuing investments in development and welfare programs.
Former Finance Minister and AIADMK leader D Jayakumar criticized the Tamil Nadu government’s 2025 budget, claiming it failed to fulfil key election promises. He pointed out that commitments like the education loan subsidy and one lakh job opportunities per year remain unfulfilled, while government employees’ demands, including the restoration of the old pension scheme, have been ignored.
Despite tax revenues exceeding one lakh crore, he noted that the public continues to face rising costs, with no relief in sight. Jayakumar also accused the DMK of merely renaming old schemes rather than introducing substantial new initiatives, asserting that this would be the ruling party’s last budget.
BJP president K Annamalai, in a post on his X handle, slammed the budget for prioritizing advertisements over clear financial allocations.
He highlighted concerns over increased state debt and rising revenue from TASMAC, alleging that the announced schemes were designed to benefit DMK supporters rather than the general public. For the fourth consecutive year, he claimed, the budget had deceived the people of Tamil Nadu, offering no real benefits to them.
இன்று தாக்கல் செய்யப்பட்டுள்ள தமிழக அரசின் பட்ஜெட்டைக் குறித்துச் சுருக்கமாகக் கூறவேண்டும் என்றால்,
தமிழகத்தில் டாஸ்மாக் வருமானம் உயர்ந்துள்ளது.
தமிழக அரசின் கடன் உயர்ந்துள்ளது.
ஒதுக்கீடுகள் இல்லாத விளம்பர அறிவிப்புகள் உயர்ந்துள்ளது.
திமுகவுக்கு வேண்டப்பட்டவர்கள்…
— K.Annamalai (@annamalai_k) March 14, 2025
This budget conveys a clear message—fiscal responsibility, inclusive development, and the need for a fairer financial relationship between the Union and states. While focusing on economic expansion and welfare, it also highlights concerns over central fund allocations and advocates for a more balanced federal structure.
Tamil Nadu positioned itself as a state that prioritizes both economic growth and social welfare, ensuring that development reaches all sections of society. The budget reflects a pragmatic approach—investing in infrastructure, industry, and human capital while maintaining fiscal discipline.
Amid evolving Centre-state dynamics, Tamil Nadu reinforces its role as a progressive, self-reliant state contributing to the national economy while seeking greater financial autonomy.
(Edited by Sumavarsha)
