Finance Minister Nirmala Sitharaman announced a substantial ₹1.4 lakh crore allocation to states for FY 2026-27 during her Union Budget presentation, accepting the 16th Finance Commission’s recommendations. This maintains the vertical devolution share at 41%, ensuring predictable and equitable resource distribution.
Sustained Fiscal Federalism
The 41% devolution commitment reflects balanced federalism, empowering states to address local priorities in education, healthcare, and infrastructure. This allocation supports state-level implementation of national schemes while preserving fiscal autonomy for region-specific development initiatives.
Strategic State Empowerment
Paired with record capex and sectoral missions, the ₹1.4 lakh crore infusion enables states to leverage central reforms in semiconductors, biopharma, textiles, and MSMEs. This cooperative federalism approach accelerates Viksit Bharat goals through synchronized Centre-state economic strategies.
