Budget 2026: States Seek Higher Capex Aid and GST Loss Compensation
Sitharaman is set to present her ninth consecutive full budget for FY27 on February 1. In a recent pre-budget meeting in New Delhi, states expressed their need for increased support concerning capital investments and compensation for revenue losses stemming from recent goods and services tax (GST) cuts.
Key Requests from the States
– Increased Capital Expenditure Support: States are urging the government for greater assistance to enhance their capital investments. This is crucial for fostering growth and improving infrastructure across regions.
– GST Loss Compensation: With recent cuts in GST impacting state revenues, there is a pressing demand for enhanced support to compensate for these losses.
– Urban Infrastructure and Rural Schemes: States are advocating for increased allocations to bolster urban infrastructure and rural development schemes, emphasizing the importance of equitable growth.
– Support for Housing Programmes: Enhanced funding for housing initiatives is a significant priority, with a focus on improving living conditions for citizens.
During the discussions, Sitharaman highlighted the importance of state engagement in reforms aimed at fulfilling India’s vision of becoming a developed nation by 2047.
Disaster Management and Climate Change
States are also calling for:
– Greater Disaster Management Assistance: A push for increased resources to help combat disasters and climate change impacts.
– Financial Packages for Vulnerable Regions: Special financial aid tailored for disaster-prone states is crucial for readiness and resilience.
The government is expected to consider the recommendations of the 16th Finance Commission in this year’s budget.
Specific State Requests
Several states presented unique needs during the meeting:
– Telangana: Advocacy for the construction of 2.5 million houses under the Pradhan Mantri Awas Yojana, faster approvals for infrastructure projects, and support for metro rail expansions.
– Andhra Pradesh: A request for a dedicated horticulture development package and support for linking two key water bodies for irrigation.
– Kerala: Emphasis on raising the borrowing ceiling to address a decline in revenue post-GST implementation and subsidy requirements for local rubber prices.
Involvement of Key Officials
The meeting brought together notable attendees, including:
– Chief ministers from Delhi, Goa, Haryana, Jammu and Kashmir, Meghalaya, and Sikkim.
– Deputy chief ministers from Arunachal Pradesh, Madhya Pradesh, Odisha, Rajasthan, and Telangana.
– Finance ministers from various states and union territories.
Union Minister of State for Finance, Pankaj Chaudhary, and senior officials from the finance ministry also participated in the discussions.
Conclusion
As the Budget 2026 approaches, state demands for higher capital expenditure support and GST loss compensation underscore the urgency for comprehensive economic strategies. Aligning these state needs with the overall national goals will be pivotal in shaping a robust financial framework for the upcoming fiscal year and beyond.