Chennai
oi-Gaurav Sharma
Tamil Nadu’s finances have become the epicentre of a political dispute, with former Finance Minister Thangam Thennarasu questioning if the fall in government borrowing signifies a turnaround in fiscal situation or contraction in infrastructure spending under Chief Minister C Joseph Vijay.
The Dravida Munnetra Kazhagam (DMK) veteran has challenged the Tamilaga Vettri Kazhagam (TVK) government to reveal the capital expenditure incurred in the first six months of the financial year 2026-27, and seek details of pending payments for projects executed during the DMK rule.
Former TN Finance Minister Thangam Thennarasu questioned the TVK government’s reduced borrowing, suggesting it reflects decreased infrastructure spending rather than improved fiscal health, and demanded details on capital expenditure and pending project payments.
The controversy erupted after reports showed Tamil Nadu’s borrowing through government securities dipped 21 per cent between April and September compared to the same period of last year.
While the drop has become the fulcrum of debates on the government’s borrowing pattern, Thennarasu argued that it does not necessarily reflect an improvement in the state’s fiscal health.
The senior MK leader questioned if the reduction in borrowing reflected delayed projects, overdue payments to contractors and lower outlays in infrastructure building despite better finances.
DMK Seeks Data on Capital Expenditure
Thennarasa has also demanded the current government to reveal the expenditure incurred on capital work in the period, as well as any bills pending payment for projects sanctioned under the previous administration.
Budget of Rs 57,231 crore for capital expenditure for 2025-26 that Tamil Nadu announced on 1 April 2025 has come under scanner.
Provisional monthly accounts of the Comptroller and Auditor General (CAG) provided by the former minister showed that Rs 13,002.22 crore was spent on capital work, including the Metro Rail projects, between April and September 2025.
He wants to know if the figures released for the first six months of the financial year would reflect a similar trend with respect to newly sanctioned projects, and payment status of projects completed by various government departments.
The DMK leader stated that without concrete numbers, the fall in borrowing should not be taken as indication of improved fiscal management.
Proposed Borrowing Raises More Questions
The DMK leader has raised more questions on the borrowing plan of TVK government, pointing out that according to his figures, the government intends to borrow Rs 48,000 crore during October-December – compared to Rs 23,500 crore in the previous quarter.
He wanted to know from the government if this proposal squares with its argument of drop in borrowing in the first six months of the financial year.
At a time when Tamil Nadu’s debt levels, finances and spending on committed projects are of concern, Thennarasu believes that the TVK government’s fiscal situation continues to be precarious, despite the lowering borrowing figures.
State’s debts have come under intense scrutiny with the Revised Budget Estimates for 2026-27 putting the outstanding loans at 10.99 lakh crore.
This works out to just about the amount approved by the previous government in the form of the Interim Budget in February 2026.
Finance Minister N Marie Wilson admits that rising debt and interest payment will squeeze funds and affect the government’s ability to roll out new schemes.
TVK Government’s Revenue Reforms Under Scrutiny
The new government is embarking on a mission to improve revenue collection through administrative reforms, rationalisation of procurement procedures and augmentation measures in tax collections.
Wilson is optimistic that there would be Rs 15,000 crore increase by reason of changes in the Goods and Services Tax (GST) laws, property registration laws and the creation of a new mining administration. The proposed amendments in liquor excise laws would add Rs 1,000 crore to the state’s kitty every year.
An empowered Revenue Augmentation Committee comprising former Deputy Chairman of Planning Commission Montek Singh Ahluwalia has been set up to suggest measures to address the gaps in Tamil Nadu’s revenue picture.
However, Thennarasu’s intervention has diverted the attention to the expenditure side of a government’s budget.
The DMK leader accused the TVK government of underspending in revenue receipts, and blamed the delay in allocating money for investments for the recent dip in borrowing figures.
He added that thousands of crores worth of tenders have been cancelled, roads have been allowed to get into disrepair and there are half-completed projects, some of which must be verified with expenditure records of various government departments.
Infrastructure Spending Emerges as Crucial Test
The Tamil Nadu Budget 2026-27 announced by the TVK government provides for Rs 9,300 crore for Comprehensive Road Infrastructure Development Programme, Rs 2,117 crore for integrated urban development mission and Rs 500 crore for electrical and mechanical infrastructure to support 1,000 new air-conditioned electric buses in Chennai.
The rate at which these projects will take off will be a key test to judge if budget provisions for Tamil Nadu would translate into projects and assets created .
Decline in borrowing could be a result of increased revenues, reduced spending or a combination of both.
Lower outlays to spend on projects may also contribute towards lower borrowing. It is a combination of these factors that can be determined with specific numbers on capital expenditure and pending payment to contractors.
Thennarasu has asked the TVK government to release information on expenditure incurred on capital projects and bills pending payments, to enable citizens to judge its claim of improved fiscal health with reduced borrowing.
