Pre-Budget meet: States push for equitable funds, higher deficit limits

Chief Minister Pramod Sawant has sought a more equitable Centre-state funding pattern under centrally sponsored schemes, taking into account Goa's coastal challenges, Western Ghats ecology, and national tourism responsibilities.

Sawant attended the pre-budget Meeting for the Union Budget 2026-27, chaired by Union Finance Minister Nirmala Sitharaman, in New Delhi on Saturday. Finance ministers of various states and Union Territories and other senior officials participated in the meeting.

Later, Sawant, in a statement, said the meeting involved detailed deliberations on key provisions and priorities for the upcoming Union Budget.

"Goa's perspectives, demands, and developmental requirements were presented, with a focus on sustaining momentum in critical infrastructure projects," he said.

The CM said Goa also sought to strengthen social welfare schemes, ensuring continued support for capital investment, carrying forward state-specific Finance Commission recommendations, and seeking a "more equitable Centre-state funding pattern under the centrally sponsored schemes," taking into account Goa's coastal challenges, Western Ghats ecology, and national tourism responsibilities.

"Special emphasis was placed on improving industrial and logistics connectivity, enhancing rail links to major urban centres, and developing climate-resilient infrastructure to address coastal and environmental challenges," he said.

The discussions also covered the need to augment healthcare capacity, strengthen waste management and sanitation systems, support tourism diversification and skilling, and accelerate the transition towards renewable and clean energy in alignment with national climate commitments, the CM said.

"These consultations are an important step towards aligning state aspirations with national development goals, as Goa continues its journey towards Viksit Goa 2037, in harmony with the vision of Viksit Bharat 2047," he added. 

The Telangana government has appealed to the Centre to enhance the fiscal deficit target to at least four per cent of the GSDP from the ideal levels of around 3.5 per cent, in order to contribute to the Viksit Bharat', and sought the conversion of the 50-year interest free loans extended to States into grants.

Addressing the Pre-Budget Meeting at the national capital on Saturday, Telangana Deputy Chief Minister Mallu Bhatti Vikramarka said to achieve USD 3 trillion economy by 2047, the state would require more resources to invest in public infrastructure and to increase our capital investment rate from present 37 per cent to 50 per cent of GSDP (gross state domestic product).

To sustain this and to transform the Indian economy into a USD 30 trillion by 2047 and enable the States to contribute to Viksit Bharat, it is necessary to enhance their fiscal deficit targets to at least 4 per cent of GSDP per annum. In addition, the 50-year interest free loans given to States may be converted into grants and the amount of assistance may be doubled from the current levels, he said.

According to Bhatti, the central government is currently spending over 20 per cent of its total expenditure on State and Concurrent subjects. A 25 per cent reduction in Centre's expenditure will free up over Rs.2.21 lakh crore per annum and that amount can be transferred to States for sector and State specific needs.

In recent years, the share of cesses and surcharges in the gross tax revenue of the Centre reached 20 per cent. As a result, though the recommended share of tax devolution to States by the 15th Finance Commission is 41 per cent, the States are actually getting only 30 per cent of the gross tax revenue of the Centre as tax devolution.

He opined that the rate reduction under GST 2.0 may boost demand, but it is doubtful if this can be sustained year after year.

It is expected that states revenues under GST may decrease due to rate reduction, a suitable mechanism needs to be put in place to compensate the States for loss of revenue, the Deputy CM said.

Noting that for the first time, the union government broke the tradition by not accepting the State Specific and sector Specific grants recommended by the 15th Finance Commission, he said as a result, Telangana lost Rs.2,362 crore in the form of State specific grants and Rs.3,024 crore in the form of sector specific grants.

He appealed to Finance Minister Nirmala Sitharaman to accept all the recommendations of the 16th Finance Commission relating to fiscal transfers to the State as such transfers come as a package.