Budget 2026: States Seek Increased Capex Aid and GST Loss Compensation
Nirmala Sitharaman is set to unveil her ninth consecutive full budget for FY27 on February 1. Ahead of this significant event, various states have voiced their demands for greater financial support to bolster capital investments and offset revenue losses caused by recent Goods and Services Tax (GST) reductions.
Key Demands from States
– Increased Capital Expenditure Assistance: States are requesting enhanced special assistance for capital investments to support infrastructure growth.
– GST Loss Compensation: There is a strong push for improved support to compensate for revenue losses linked to the recent GST cuts.
– Urban and Rural Infrastructure Allocations: The states are advocating for higher funding for urban infrastructure initiatives and rural schemes.
– Housing Program Enhancements: A boost for housing programs is essential to meet the growing demands for affordable housing.
During the pre-budget meeting, Finance Minister Nirmala Sitharaman emphasized the necessity of state involvement in reform initiatives to realize India’s vision of becoming a developed nation by 2047.
Disaster and Climate Change Support
States are also seeking increased assistance for disaster management and climate change initiatives. They are calling for a dedicated financial package aimed at disaster-prone regions. The recommendations from the 16th Finance Commission, due for consideration this year, are expected to play a pivotal role in addressing these needs.
Specific Requests from State Leaders
– Telangana:
– Requested approval for constructing 2.5 million homes under the Pradhan Mantri Awas Yojana.
– Seeks expedited approvals and funding for major road and rail infrastructure projects, including the Hyderabad Metro Rail Phase-2 expansion.
– Andhra Pradesh:
– Proposed a dedicated Rayalaseema Horticulture Development Package.
– Requested support for the Polavaram–Nallamala Sagar link project.
Finance Minister Nirmala Sitharaman has also engaged with a variety of stakeholders, including economists, industrialists, farmer associations, and small enterprises, to gather input for the upcoming budget. Most recently, she conversed with students from the Delhi School of Economics regarding potential budgetary enhancements.
Meeting Attendance
The pre-budget discussions included participation from state governors, chief ministers from several states including Delhi, Goa, and Sikkim, as well as finance ministers from various union territories. Union Minister of State for Finance Pankaj Chaudhary and senior officials from the finance ministry were also present.
Conclusion
As we approach Budget 2026, the calls for higher capital expenditure aid and GST loss compensation underscore the urgent financial needs of states. The responses to these requests will play a crucial role in supporting infrastructure development and alleviating revenue challenges across various regions. Stakeholders eagerly await the budget presentation on February 1.