In a notable assertion of federal solidarity, Union Finance Minister Nirmala Sitharaman underscored the Centre’s steadfast support to States through timely tax devolution and the clearance of GST compensation arrears, aimed at stimulating economic growth. This was prominently highlighted during the 53rd GST Council meeting held in New Delhi on June 22, 2024.
During this crucial pre-Budget consultation, states collectively voiced their need for augmented funding for various pivotal projects. Sitharaman reaffirmed the Union government’s commitment to facilitating growth by ensuring the timely distribution of tax revenues, Finance Commission grants, and the settlement of GST compensation dues.
The discussion pivoted to the ‘Scheme for Special Assistance to States for Capital Investment,’ where Sitharaman pointed out that while the majority of loans under this scheme are untied, a significant portion is contingent upon states meeting specific citizen-centric reforms and undertaking sector-specific capital projects. She urged states to utilize these loans by adhering to the stipulated criteria to maximize their developmental impact.
Kerala Finance Minister KN Balagopal made a compelling case for a special package of ₹24,000 crore in the 2024-25 Budget, aimed at alleviating the state’s current liquidity challenges. Simultaneously, Karnataka Finance Minister Krishna Byre Gowda emphasized the urgency of releasing ₹5,300 crore for the Upper Bhadra Water Project and called for its recognition as a national project. Gowda further advocated for the inclusion of cesses and surcharges in the divisible pool to ensure states receive their rightful share of central taxes, and sought a substantial increase in the central contribution to housing scheme beneficiaries.
Rajasthan’s Finance Minister and Deputy Chief Minister, Diya Kumari, articulated the state’s request for increased allocations towards critical projects such as the Eastern Rajasthan Canal Project (ERCP), Jal Jeevan Mission (JJM), select national highway projects, and railway lines. This concerted push from states underscores the ongoing need for robust federal support to drive regional development and economic resilience.