BUDGET
FY26 transfer to states seen at INR 25.60 tln, up 12.5% on year
This story was originally published at 15:48 IST on 1 February 2025
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NEW DELHI – The Budget on Saturday projected transfers to states and Union territories in the next financial year starting April at INR 25.60 trillion, up 12.5% from the revised estimate of INR 22.76 trillion for FY25. The Budget for FY25 had projected the transfer to states at INR 23.49 trillion.
The Budget for FY26, presented by Finance Minister Nirmala Sitharaman in Parliament, projected devolution of taxes to states at INR 14.22 trillion, up 10.5% from the revised estimate of INR 12.87 trillion in FY25.
According to the 15th Finance Commission's recommendations, the Centre devolves 41% of the divisible pool of taxes to the states and union territories. The next financial year is the last year for the award under the 15th Finance Commission. The 16th Finance Commission will submit its report on the devolution of taxes to states for five years starting FY27 by Oct. 31, 2025.
The Budget projected the transfer of Finance Commission grants to states at INR 1.33 trillion, up 4.4% from the revised estimate for FY25.
The following table details the transfer of resources to states and union territories with the legislature as per the Budget proposals (in INR billion):
2025-26 (Budget Estimate) | 2024-45 (Revised Estimate) | 2024-25 (Budget Estimate) | Yr-on-yr % change (BE v/s RE) | |
| Devolution of taxes | 14,224.44 | 12,868.85 | 12,472.11 | 10.5% |
| Finance Commission grants | 1,327.67 | 1,271.46 | 1,323.78 | 4.4% |
| Other transfers | 10,045.53 | 8,614.80 | 9,693.91 | 16.6% |
| Total transfer | 25,597.64 | 22,755.11 | 23,489.80 | 12.5% |
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Reported by Priyasmita Dutta and Christina Titus
Edited by Saji George Titus
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