‘No state neglected in Budget’: FM Nirmala Sitharaman shreds Opposition’s claims

Union Finance Minister Nirmala Sitharaman on Wednesday rejected all opposition claims that states have been neglected in the Union Budget and asserted that the Centre has transferred the full 41% share of divisible taxes to states as recommended by the Finance Commission. Replying to the debate on the budget in Parliament, Sitharaman said the headline capital expenditure stands at Rs 12.2 lakh crore, while the effective capital expenditure, including grants to states, totals Rs 17.1 lakh crore, amounting to 4.4% of GDP.

“This Rs 17.1 lakh crore is being spent to build assets across states and Union Territories,” she said, emphasising that the money is going directly to strengthen infrastructure across the country.

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Centre has not diluted tax devolution: FM

Sitharaman also dismissed allegations that the Centre has diluted tax devolution. “We have transferred 41% of the divisible pool to the states. No state’s share has been reduced,” she said.

Underscoring the scale of the transfer, she said that for 2026-27, Rs 25.44 lakh crore have been transferred to states, including tax devolution and releases under centrally sponsored schemes, an increase of Rs 2.70 lakh crore over the current year’s revised estimate and Rs 3.78 lakh crore more than the 2024-25 actuals.

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Sitharaman also said that there is no shortage of lending to industry, including small and medium enterprises, as total credit increased by 13.8% in the current financial year.

The 16th Finance Commission report tabled in Parliament reviewed transfers from 2018-19 to 2022-23 and concluded that the Centre’s devolution matched its recommendations in each year.

Addressing criticism over cesses, she said collections earmarked for sectors such as education, health, and roads ultimately support states. She pointed members to Annex 4A and 4B of the budget receipt documents, audited by the CAG, for detailed data on how funds are allocated.

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Sitharaman emphasises Centre’s push for infrastructure

She also talked about the Centre’s push for infrastructure. “It’s not just roads, it’s not just national highways. We are also looking at waterways, so that the cost of logistics may come down and states which are not connected to sea ports will have advantage of moving goods faster at a lesser cost,” she said.

Sitharaman said the Centre is willing to work with states for Mega Textile Parks, particularly looking at industrial textiles, which are going to be “new age” and becoming a part of the manufacturing sector.

Lok Sabha took up discussion on the Union Budget on Tuesday. Sitharaman is expected to reply to the debate in the Rajya Sabha on Thursday.

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