Union Finance Minister Nirmala Sitharaman has commenced pre-budget consultations with various states and Union Territories in preparation for the Union Budget 2025-26. These discussions aim to gather suggestions and incorporate diverse perspectives to shape an inclusive and effective policy framework.
Key Discussions and Participation
On December 20, 2024, Sitharaman chaired a pre-budget consultation meeting in Jaisalmer, Rajasthan, with Finance Ministers from various states and Union Territories. The meeting saw the participation of Union Minister of State for Finance Pankaj Chaudhary, as well as Chief Ministers from Goa, Haryana, Jammu and Kashmir, Meghalaya, and Odisha. Deputy Chief Ministers from states like Arunachal Pradesh, Bihar, Madhya Pradesh, Rajasthan, and Telangana also attended. The consultations also included Finance Ministers of States/UTs, Secretaries of the Departments of Economic Affairs and Expenditure, and senior officials from both state and central governments.
Focus on Economic Growth and Stability
The pre-budget discussions served as a platform to discuss measures to improve economic stability and encourage sustainable growth. States are expected to play a key role in advocating for policies that promote innovation, investment, and job creation. The consultations are particularly significant in light of recent state election results.
State Demands and Requests
During the meeting, states raised several demands, including requests for the central government to bear a larger share of land acquisition costs for projects. Some states requested an increase in allocation for 50-year interest-free loans, while others urged for an increase in borrowing limits to support fiscal activities. States also emphasized the need for additional funding for disaster relief and requested more allocation for the State Disaster Response Fund (SDRF). Increased funds were also sought for the Jal Jeevan Mission, specifically for tanks and storage to enhance water supplies. Additionally, a request was made to increase the honorarium paid to Accredited Social Health Activists (ASHA) workers.
SASCI and Disaster Relief
Sitharaman highlighted the success of the Scheme for Special Assistance to States for Capital Investment (SASCI), introduced in Budget 2020-21, which has been instrumental in building critical capital assets across states. For FY 2024-25, the Centre has allocated an additional ₹30,000 crore as untied funds under SASCI, allowing states flexibility in using these resources for capital expenditure. She also announced a special provision under SASCI for states affected by severe natural disasters, enabling them to receive up to 50% of their untied fund allocation for rebuilding damaged infrastructure, in addition to support from the National Disaster Response and Mitigation Fund (NDRMF).
Other Consultations and the Upcoming Budget
In addition to the meeting with states and UTs, Sitharaman has held a series of pre-budget meetings with various stakeholders, including MSMEs, farmers' associations, economists, and industry leaders. Prime Minister Narendra Modi also met with economists and thought leaders at NITI Aayog to discuss strategies for the upcoming Budget. The Union Budget for the fiscal year 2025-26 is expected to be presented in Parliament on February 1, 2025. This will mark Sitharaman's eighth consecutive Budget presentation as Finance Minister.
