Finance Minister Niramala Sitharaman on Tuesday strongly rebutted the charge that the Centre is cutting down on the fiscal transfers to States, especially to the ones ruled by the Opposition parties, saying that Budgetary allocation to all states combined are estimated to rise substantially in FY25. “The dues to the states are (being transferred) on time,” she said.
Accusing the leaders of some states for making “misleading” statements, she said that the Budget for FY25 has allocated Rs 22.91 trillion to all states, which is 27.5% higher than the Budget Estimate of FY24.
These include devolution of taxes, grants and special assistance, and funds under centrally sponsored schemes, and central sector schemes.
In her Budget speech, presented on July 23, Sitharaman had only mentioned two states by name– Bihar and Andhra Pradesh. This led to a furore as Opposition parties said the Budget sought to placate the key allies of the ruling BJP – Janata Dal (United) and Telugu Desam Party, at the expense of other states.
In her reply to the Budget discussions in the Lok Sabha, the Finance Minister said that “I have been picking up Budget speeches since 2004-05, 2005-06, 2006-07, 2007-08 etc. The Budget of 2004-05 did not take the name of 17 states. I would like to ask the members of the UPA government at that time – did money not go to those 17 states? Did they stop it?”
On India being the fastest-growing major economy, Sitharaman said that India has been able to consistently achieve high growth due to a sustained capital expenditure push by the central government. In FY25, the government has pegged capital expenditure at Rs 11.11 trillion, which is 3.3 times more than the pre-Covid period.
She further said that allocation towards social sector schemes–particularly addressed towards agri & allied sectors; education, employment & skilling; women & girls; rural development; and urban development – have collectively seen an increase of over Rs 1.5 trillion in the 2024-25 Budget.
She mentioned that the Narendra Modi led government is fiscally prudent, and it will be able to contain the fiscal deficit below 4.5% as a percentage of GDP in FY26. The FY25 Budget has pegged the fiscal deficit-to-GDP ratio at 4.9%, lower than 5.1% pegged in the interim Budget.
On inflation, Sitharaman mentioned that India’s inflation is under control due to the way in which Prime Minister Narendra Modi planned the economy despite Covid-19 pandemic. She said that retail inflation during 2020-2023 was much lower than the global average.
During UPA 10-year rule, the inflation averaged 8.1%, and during NDA 10-years, it averaged 5.1%, highlighted the Minister. India’s CPI inflation is expected to average 4.5% in the entire financial year 2024-25, as per the RBI’s estimate, lower than 5.4% in FY24.
On unemployment, Sitharaman said that the employment of Indian youth rose sharply, rising from 34% in 2014 to 51% in 2024, due to skill training. And on the issue of household savings plunging to 50-year low, she said that it only depicts India’s households shifting their savings to physical and financial assets.
