FM’s Pre-Budget consultation with states: Higher capex spends, hike in interest-free loans and more exigency funds on states’ wishlist

Some states including Karnataka and West Bengal also sought enhanced payments for Anganwadi and Asha (accredited social health activist) workers, sources said. Many states also asked for additional funds for road development and railways projects along with additional funds for Jal Jeevan Mission to arrange for tanks and storage to enhance water supplies.

States that suffered a natural disaster of severe nature in financial year 2024-25 may be eligible for up to 50 per cent of their allocation under Part-1 (Untied) of the SASCI (Special Assistance to States for Capital Investment) scheme, Sitharaman told the states.

“This amount will be in addition to the funds provided under the National Disaster Response and Mitigation Fund (NDRMF),” an official statement quoted her as saying.

In the meeting, Maharashtra is also learnt to have asked for funds for Mukhyamantri Majhi Ladki Bahin Yojana along with a demand for tweaks in the sharing pattern of Centrally Sponsored Schemes (CSS), with states and Centre’s contribution at 50 per cent each.

Many states asked for an increase in allocations for the 50 years interest-free loan scheme, especially to focus on capital expenditure. Kerala Finance Minister K N Balagopal in his speech said the Centre has to recognise that fiscal consolidation achieved through restrictions in government expenditure may not necessarily be a desirable outcome. “We reiterate that fiscal consolidation targets should not compromise sustainable growth. Instead, state governments should be empowered to fulfil their expenditure commitments and implement macroeconomic policies that drive faster national economic growth,” Balagopal said.

Himachal Pradesh is learnt to have asked for more funds to mitigate disasters and funds for better road connectivity along with funds for expansion of rail lines.

Andhra Pradesh asked for more funds for interlinking of rivers and an enhancement of funds for capital expenditure, with special focus on centrally sponsored schemes for the backward regions.

West Bengal’s Finance Minister Chandrima Bhattacharya said she sought the release of pending dues. “Whatever is pending, those amounts have to be released. We are a state which is flood prone, so many floods we have faced many people have suffered. Centre has to come forward and give us assistance,” she said.

She demanded that 50 per cent of the 50-year interest free loans be tied to disaster management in order to mitigate the state that face natural disasters frequently, adding that the Union Finance Minister has said that funds would be allotted to all states towards disaster mitigation. West Bengal also demanded a special package and a debt package to help it get over the financial stress.

Telangana Deputy Chief Minister Mallu Bhatti Vikramarka said Centre should give flexibility to states to use CSS funds and not insist on branding. He also demanded that the Andhra Pradesh bifurcation act be implemented fully so that Telangana gets all its rights under the act.

Punjab’s Finance Minister Harpal Singh Cheema said that he demanded an incentive package given to states which share borders with neighbouring countries. “We are a border state, so we asked for incentives and an industrial package like it exists in other regions such as J&K, Himachal Pradesh,” he said.