Published Feb 11, 2025 | 8:00 AM ⚊ Updated Feb 11, 2025 | 8:00 AM
Synopsis: Though state fiscal transfers from the Union government have grown substantially since the pandemic, reaching ₹6,51,584.10 crore in 2024-25, the actual disbursements have regularly fallen short of promised amounts in most years. The government projects transfers of ₹7,17,041 crore for 2025-26, but given the pattern, states may have to prepare for potential shortfalls.
The Union government has drastically reduced its promised financial transfers to states for fiscal year 2024-25, cutting the allocated funds by ₹79,631 crore from the initial budget estimates, data from the Union Expenditure Budget 2025-26 outlay shows.
The revised estimates for the current fiscal year stand at ₹6,04,477 crore, an 11.6 percent reduction from the originally budgeted ₹6,84,108 crore. The massive shortfall continues a concerning pattern since the pandemic, with actual transfers consistently falling below promised amounts in all years except 2022-23.
Amidst Opposition allegations of financial disparity by the BJP-led NDA government, the recurring gaps between promised and actual transfers could significantly impact states’ ability to fund crucial development projects and maintain essential services.
Since the pandemic, the fiscal transfer budget for states has grown exponentially from ₹2,89,532.55 crore to ₹6,51,584.10 crore in 2024-25. However, the actual transfers have consistently fallen short.
The fiscal year 2022-23 was an outlier, when the trend reversed, with actual transfers surpassing budget estimates by a whopping 48.9 percent – ₹5,71,342 crore against the original estimate of ₹3,83,682 crore.
However, the following year, in 2023-24, actual transfers fell short by ₹80,241 crore, or 12.3 percent below the budgeted amount.
In 2020-21, actual transfers (₹3,25,453.19 crore), though higher than budgeted (₹2,89,532.55 crore) by 12.4 percent, fell short of the revised estimates (₹3,58,789.05 crore) by 9.3 percent.
The following year, 2021-22, saw actual transfers (₹3,45,847.12 crore) fall below budget estimates (₹3,63,355.20 crore) by 4.8 percent.
Looking ahead, the central government has projected transfers of ₹7,17,041 crore for 2025-26, but given the recent pattern, states might need to brace for potential shortfalls.
(Edited by Dese Gowda)
