TN Budget 2025 tries to negotiate choppy fiscal waters amid dwindling Central funds

Presented by Finance Minister Thangam Thennarasu on Friday (March 14), the Budget also had a political strategy amid the state’s ongoing conflict with the Centre over the issues of language and delimitation, while also featuring populist measures designed to strengthen the DMK's voter base.

‘Won’t waver from bilingual policy’

Referring to the ongoing tension between the Tamil Nadu government and the BJP-led Union government, Thennarasu accused the latter of undermining the state’s financial independence through biased policies. He especially pointed to the Centre's alleged retention of Rs 2,152 crore from the Samagra Shiksha Abhiyan scheme, which is tied to Tamil Nadu's refusal to implement the National Education Policy (NEP) 2020. The state perceives the policy as an imposition of a three-language formula that threatens its established two-language policy of Tamil and English.

Also read: Tamil Nadu Budget 2025-26 Live: 'No compromise on two-language policy; TN will bear the cost'

“We will not waver from our bilingual policy, even if it means forfeiting Rs 2,152 crore from the Centre," Thennarasu said, eliciting applause from DMK legislators.

The declaration served as a direct response to Union Finance Minister Nirmala Sitharaman’s previous criticism against the state's linguistic policy, reinforcing the DMK's enduring narrative of opposing ‘Hindi imposition’ and preserving Tamil identity.

Tax devolution

The Budget document also highlighted the diminishing financial contributions from the Centre to Tamil Nadu. Thennarasu noted that while the state accounts for 9 per cent of national economic growth, it receives merely 4 per cent of central funds through tax devolution and grants-in-aid.

“The Union government’s subsidies and tax allocations are dwindling, hindering our development efforts," he said, referring to the meagre Rs 276 crore allocated from the National Disaster Response Fund (NDRF) following Cyclone Michaung and the 2023 floods in southern districts—calamities that inflicted billions in damages on the state.

The criticism positioned the DMK as a victim of central neglect, a narrative that is likely to resonate with voters ahead of the 2026 elections.

Also read: TN budget: Fiscal deficit estimated to reduce to 3.04% of GSDP in 2025-26

While the Tamil Nadu government’s move to replace the rupee symbol with Tamil letter ‘Roo’ in the budget logo invited criticism from the BJP, Thennarasu defended the decision, calling it a celebration of Tamil culture.

Populist initiatives

As the 2026 elections approach, the Budget has effectively served as a populist manifesto, highlighting the DMK’s dedication to welfare and inclusive development—fundamental principles of its Dravidian ideology.

A notable announcement was the potential expansion of the Magalir Urimai Thogai scheme, a key initiative that provides Rs 1,000 monthly to eligible women. Deputy Chief Minister Udhayanidhi Stalin recently hinted at an increase in the number of beneficiaries, and although Thennarasu did not provide specific details, he reaffirmed the government’s commitment to women’s empowerment, asserting, “social justice and women’s welfare are the foundations of our governance.”

Political analysts interpret this as a strategic effort to strengthen the DMK’s appeal among women voters, a vital demographic in Tamil Nadu.

Hut-free TN by 2030

Another significant populist promise was the commitment to construct one lakh concrete houses under the existing Kalaignarin Kanavu Illam scheme, named in honour of late DMK leader M Karunanidhi. Building on last year’s announcement, Thennarasu reiterated the ambition of achieving a “hut-free Tamil Nadu by 2030”, a vision that combines infrastructure development with emotional significance for the party’s supporters.

Watch: BJP vs DMK - Who is the real Hypocrite? | Tamil Nadu Budget 2025-26 Live

He also announced an allocation of Rs 275 crore for student hostels in Chennai, Coimbatore, and Madurai – each designed to accommodate 1,000 students – furthering targeting the youth, a demographic the DMK has actively sought to engage since 2021.

Initiatives to preserve Tamil identity

The Budget also prominently featured ‘Tamil pride’, a strategy that has proven effective for the DMK in garnering votes. Thennarasu announced an Rs 2 crore allocation for Tamil book fairs in major Indian cities such as Delhi, Mumbai, and Kolkata, as well as in international centers like Singapore and Kuala Lumpur. The World Tamil Olympiad, which includes a Rs 1 crore cash prize, and the establishment of ‘Agaram,’ a language museum in Madurai, were presented as initiatives aimed at promoting Tamil culture on a global scale. While these financial commitments may appear modest, they carry significant symbolic importance, reinforcing the DMK’s image as the protector of Tamil identity—a strong counter to the BJP’s national narrative.

Opposition's response

The budget session unfolded amid notable tension in the Assembly.

Legislators from the AIADMK and BJP walked out in protest as Thennarasu commenced his address, voicing concerns over alleged irregularities within the Tamil Nadu State Marketing Corporation (Tasmac) and calling for the government's resignation.

Also read: EPS slams ‘empty budget’ as AIADMK, BJP walk out of TN Assembly

AIADMK leader Edappadi K Palaniswami, speaking to the media, asserted that searches conducted by the Enforcement Directorate (ED) had revealed a scam amounting to Rs 1,000 crore, accusing the DMK of fiscal mismanagement.

“This Budget serves as a mere illusion to conceal their failures,” reiterating his previous warnings that Tamil Nadu's debt could exceed Rs 5 lakh crore by 2026.

Rupee row

The BJP capitalised on the controversy surrounding the rupee symbol and issues related to law and order to portray the DMK as both divisive and ineffective.

In response, Thennarasu dismissed these allegations, maintaining that Tamil Nadu's borrowing is within the limits set by the Finance Commission and that the state’s Gross State Domestic Product (GSDP) of Rs 31.57 lakh crore indicates strong economic growth. “The clamour from the opposition cannot overshadow our accomplishments,” he remarked.

Path to 2026

The 2025-26 Budget represents a strategic and visually impactful political manoeuvring by the BJP. By portraying the central government as an opponent, the DMK aims to unite the electorate of Tamil Nadu around themes of regional pride and self-governance, a strategy that has historically benefited Dravidian parties.

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The budget's populist initiatives — focusing on housing, women's welfare, and the promotion of Tamil culture — are designed to solidify the party's support base while addressing criticisms regarding debt and governance. With the AIADMK in a weakened state and the BJP struggling to establish a foothold in Tamil Nadu, the budget positions the DMK as a significant contender as the state approaches the 2026 elections.

As Tamil Nadu heads toward the elections, Thennarasu’s Budget has established a framework for a highly competitive political landscape, where fiscal realities and populist commitments will compete against ideological divides for dominance.