The 16th Finance Commission has recommended more than ₹27,000 crore for Tamil Nadu's Urban Local Bodies (ULBs) for 2026-31, besides special infrastructure and urbanisation grants. A basic grant of ₹20,054 crore will flow from 2026-27, while ₹2,507.50 crore each is earmarked as ULB performance grant and State performance grant, released conditionally from 2027-28. Coimbatore and Madurai Corporations may take up projects of up to ₹3,500 crore each under the special infrastructure component. A one-time urbanisation premium of ₹2,000 crore, based on 2011 Census population, will help merge peri-urban villages with nearby ULBs, and ₹791 crore is proposed for climate-resilient city infrastructure.