Tamil Nadu Interim Budget | State universities to get a composite grant of ₹767 crore a year

State-run universities in Tamil Nadu will receive a composite grant of ₹767 crore a year, according to an announcement made by Finance Minister Thangam Thennarasu in his Interim Budget speech on Tuesday (February 17, 2026).

Mr. Thennarasu added that a performance fund of ₹175 crore has also been created by the government with the objective of incentivising better fiscal management and academic performance of the State-run universities.

The announcement is drawn from a G.O. issued by the Higher Education Department on December 17, 2025, adopting a revised Block Grant and Performance Grant regime, provided the universities satisfy certain conditionalities. The government had set up an official committee headed by the Expenditure Secretary in November 2024 to make recommendations pertaining to Block Grants to all State-run universities, other than Annamalai University.

In its report, which was tabled in October 2025, the Committee observed that the “existing model of disbursement of grants under various names such as Block Grant, Additionality Grant, and Ad hoc Grant has not resulted in excellence in academics or better financial discipline,” the G.O. stated. The report underlined the need to incentivise fiscal discipline and academic performance recommending the setting up of a Performance Incentive Grant. However, both Block Grants and Incentive Grants would be payable to the universities only upon satisfying certain conditions.

The mandatory conditions for receiving Block Grants include adopting a computerised Accrual Based Accounting System and the Model Procurement Policy of the government, recruiting teachers and staff through the Teachers’ Recruitment Board and the Tamil Nadu Public Service Commission, and complying with statutory requirements under Income Tax, GST, and labour laws.

Similarly, Performance Grants would be disbursed upon the universities satisfying an array of performance metrics recommended by the official committee. In 2018, the government had fixed the payout rates to 10 State-run universities totally amounting to ₹9,149.80 crore annually, with Bharathiar University receiving the highest Block Grant of ₹2,145.34 crore.