The Tamil Nadu government is boosting capital expenditure to improve the State’s infrastructure. In 2025-26, it has allocated ₹57,231 crore for capex as against ₹46,766 crore in the Revised Estimates 2024-25, an increase of 22 per cent. Capex is projected to be ₹71,539 crore in 2026-27 and ₹89,423 crore in 2027-28.
The ambitious planned capital outlay for FY26 comes despite the state falling marginally short of the budgeted capital expenditure in FY25. The revised estimate for capex for FY25 is ₹46,766.03 crore as against the originally budgeted level of ₹47,681 crore
The capex is largely towards developing road infrastructure, more funds for metro rail projects and money set aside for improving the drinking water infrastructure across Chennai and other cities.
The minister announced a ‘Ring Main Pipeline Project’, to connect all the water distribution stations to ensure equitable distribution of water supply to all the water distribution stations in Chennai city. This will be implemented over the next three years at an estimated cost of ₹2,423 crore to ensure balanced water supply.
With the rapid economic growth and urban expansion in Tamil Nadu, the State government is exploring the feasibility of establishing a Regional Rapid Transit System (RRTS) in three routes. This initiative follows the model of the Semi High-Speed Railway (SHR) between New Delhi and Meerut.
The Chennai Metro Rail Corporation will conduct detailed feasibility studies for setting up an SHR system with a speed of 160 kmph in Chennai–Chengalpattu–Tindivanam–Villupuram (167 km) stretch; Chennai–Kanchipuram–Vellore (140 km) and Coimbatore–Tiruppur–Erode– Salem (185 km), as per Budget 2025-26.
- Also read: Tamil Nadu Budget 2025 LIVE
On Metro Rail, the minister said the Chennai Metro Rail Phase-II is the largest ongoing metro rail project in the country, being implemented at a cost of ₹63,246 crore and a total length of 119 km across three corridors. The project is progressing rapidly, and in these routes, the elevated corridor between Poonamallee and Porur is set to be opened for public use in December this year.
Detailed project reports (DPRs) for the metro rail projects in Coimbatore on the Avinashi Road and Sathyamangalam Road routes estimated at ₹10,740 crore, and for the Thirumangalam–Othakadai corridor in Madurai, estimated at ₹11,368 crore, have been submitted for equity contribution from the Union Government, and construction work will commence as soon as the approval is granted.
Additionally DPRs will also be submitted for extending the Chennai Airport metro line to Kalaignar Centenary Bus Terminus in Kilambakkam, covering 15.46 km at a cost of ₹9,335 crore; extending the Koyambedu line to Pattabiram via Avadi, spanning 21.76 km at a cost of ₹9,744 crore; and for extending 27.9 km of metro line from Poonamallee to Sunguvarchatram via Sriperumbudur at a cost of ₹8,779 crore.
The Chennai Metro Rail Corporation will also conduct feasibility studies for the establishment of a high-altitude transport system, such as a ropeway, in Mamallapuram, Udhagamandalam, and Kodaikanal.
New airport
To boost tourist arrivals in South Tamil Nadu and promote the overall development of economically backward regions, a new airport will be developed in the Rameshwaram area of Ramanathapuram district.
Road transport
The Budget also announced measures for availability of transport services in the remote villages of Tamil Nadu. As part of this initiative, a sum of ₹1,031 crore has been allocated in the coming financial year for the recently announced 3,000 new buses. Additionally, 750 existing buses with functioning chassis will be refurbished at an estimated cost of ₹120 crore.
To improve the operational efficiency, service delivery and financial condition of the State Transport Undertakings (STUs), an incentive fund of ₹2,000 crore will be created in the coming financial year to provide performance-linked incentives to STUs.
Decongesting Chennai
To address the growing traffic congestion in Chennai, the Tamil Nadu State Highways Authority (TANSHA) will construct a 14.2 km long four-lane elevated road from Thiruvanmiyur to Uthandi along the East Coast Road at an estimated cost of ₹2,100 crore.
Developing industrial corridor
The Government is determined in developing several industrial corridors to promote industrial growth and generate more employment. In the first phase of this initiative, the Oragadam-Cheyyar Industrial Corridor will be established. This corridor will enhance the export potential of products manufactured in the Cheyyar Industrial Park. In the first phase, development work worth ₹250 crore will be undertaken this year.