Tamil Nadu's Finance Minister Thangam Thennarasu on February 17, 2026, announced a composite grant of ₹767 crore annually for state-run universities. Along with this, a special performance fund of ₹175 crore has been set up to encourage better financial management and academic progress. This decision follows a government order from December 17, 2025, which introduced a new system combining Block Grants and Performance Grants for universities that meet defined conditions. The conditions include using a computerized Accrual Based Accounting System, following the government’s Model Procurement Policy, hiring teachers through official recruitment boards, and complying with income tax, GST, and labor laws. The government formed a committee led by the Expenditure Secretary in November 2024 to recommend these changes. The committee's October 2025 report pointed out that the previous grant system did not improve academic excellence or financial discipline. To fix this, universities will only receive Block and Performance Grants after fulfilling the stipulated criteria. Performance Grants depend on meeting various academic and financial benchmarks. In comparison, in 2018, Tamil Nadu disbursed over ₹9,149 crore annually to ten state universities, with Bharathiar University getting the largest share of ₹2,145 crore. This new grant system aims to improve accountability and results in Tamil Nadu's university system.