At pre-Budget meet, Thangam Thennarasu flags GST losses, seeks release of pending dues

Tamil Nadu Finance Minister Thangam Thennarasu has urged the Union government to address issues such as revenue losses to the States under the Goods and Services Tax (GST) regime, release pending dues under various schemes, and announce a support package to mitigate the impact of the U.S. tariff increases on the State’s economy.

Speaking at the pre-Union Budget consultation meeting chaired by Union Finance Minister Nirmala Sitharaman in New Delhi on Saturday, Mr. Thennarasu, who represented Tamil Nadu along with Additional Chief Secretary (Finance) T. Udhayachandran and Deputy Secretary (Budget) Pratik Tayal, said the State had already spent about ₹9,500 crore in advance payment towards the Union government’s share for Chennai Metro Rail Phase II, though the project was approved in October 2024. He said the amount continued to be reflected as part of the State’s borrowings, adversely affecting Tamil Nadu’s debt-GSDP ratio and permissible borrowing limit. He sought appropriate accounting entries in line with the Cabinet approval.

He also urged the Centre to reconsider the Metro Rail proposals for Madurai and Coimbatore, saying that the grounds cited for their rejection were inconsistent with those cited for the approval granted to the projects in other cities.

Highlighting the impact of the U.S. tariff increases on the State’s economy, Mr. Thennarasu said that with 31% of Tamil Nadu’s goods exported to the U.S., the State had been facing severe consequences, especially in the textile sector. Tamil Nadu accounts for 28% of India’s textile exports and provides employment to more than 75 lakh workers. Nearly 30 lakh jobs were at an immediate risk in this sector, he said, seeking a dedicated support package for the textile sector, including interest subvention, targeted subsidies, export incentives, and tax relief.

On the GST, the Minister said the States were facing persistent revenue losses after the end of the compensation regime and owing to the recent rate rationalisation. He said Tamil Nadu was expected to lose about ₹10,000 crore in the current financial year and urged the Centre to introduce a compensation mechanism. He also said the continued use of cesses and surcharges deprived the States of their rightful share of revenues and called for their merger with the basic tax rates.

He also said ₹3,112 crore under the Jal Jeevan Mission had not been released and sought the immediate release of this sum to ensure timely completion of the work. He said the Union government’s refusal to provide its ₹2,283-crore share for the Hogenakkal Water Supply Project Phase III had delayed the financial closure of the project.

Mr. Thennarasu said ₹3,548 crore under Samagra Shiksha for 2024-25 and 2025-26 was yet to be released. This affected 44 lakh students and 2.4 lakh teachers. He said the State was forced to bear the entire expenditure and sought the release of the funds.

The Minister also urged the Centre to sanction new rail lines in industrial corridors — including Tiruppathur-Krishnagiri-Hosur, Madurai-Thoothukudi through Aruppukkottai, and the Minjur-Tiruvallur-Sriperumpudur-Oragadam-Maduranthagam — besides a semi-high-speed rail link connecting Chennai, Salem, and Coimbatore. He sought priority funding for national highway projects, including elevated roads between Tambaram and Chengalpattu.