Union Finance Minister Highlights Increased Fund Devolution in Pre-Budget Consultation

Date: December 20, 2024
Category: Budget 2025-26
Read Time: 4 Minutes

Union Finance Minister Nirmala Sitharaman chaired the pre-budget consultation with Finance Ministers of States and Union Territories (with Legislature) in Jaisalmer, Rajasthan, on December 20, 2024. The meeting brought together Chief Ministers, Deputy Chief Ministers, and Finance Ministers, along with senior officials from both Central and State Governments.

Key Highlights

  1. Enhanced Fund Devolution
    Sitharaman highlighted the increased fund devolution under the 15th Finance Commission (April 2021–December 2024), which exceeds the allocation during the 14th Finance Commission (2015–20). She attributed this growth to buoyant tax collections and a stable macroeconomic environment.
  2. Capital Investment Support for States (SASCI)
    Introduced in 2020-21, the Scheme for Special Assistance to States for Capital Investment (SASCI) continues to gain positive feedback from States. The government has allocated ₹30,000 crore as Untied Funds under SASCI for 2024-25, allowing States to invest in creating capital assets across multiple sectors.
  3. Support for Disaster-Affected States
    The government has made additional provisions under SASCI for States impacted by severe natural disasters. These provisions permit up to 50% of SASCI allocations to be used for reconstructing damaged infrastructure, such as roads, bridges, and utilities. Furthermore, this is supplemented by resources from the National Disaster Response and Mitigation Fund (NDRMF).

Valuable Inputs for Union Budget 2025-26

The consultation offered States and Union Territories an opportunity to present their suggestions. The Centre will thoroughly evaluate these proposals for potential inclusion in the Union Budget 2025-26.

Finance Minister’s Statement

“The Centre’s enhanced devolution of funds reflects efficiency in tax collection and a commitment to boosting capital investment across the country. With schemes like SASCI and additional disaster support mechanisms, we aim to strengthen infrastructure development and disaster recovery efforts, ensuring inclusive growth.”

Implications

  • For States: Increased financial autonomy and flexibility for infrastructure and disaster recovery investments.
  • For the Economy: A stronger emphasis on capital expenditure to stimulate economic growth.
  • For Citizens: Better infrastructure and timely reconstruction of disaster-affected areas.
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