New Delhi, February 11: Union Finance Minister Nirmala Sitharaman assured the Lok Sabha on Wednesday that 41% of the tax revenue will be devolved to states, amounting to an estimated Rs 25.44 lakh crore for the coming fiscal year. This marks an increase of Rs 2.7 lakh crore compared to the previous year.
In her response to the debate on the Union Budget for 2026-27, Sitharaman emphasized, "We have transferred 41% of the divisible pool to the states. No state's share has been reduced." She added that the state's share has consistently adhered to the recommendations of the 16th Finance Commission.
The Finance Minister further cited the 16th Finance Commission's analysis of fund devolution from 2018 to 2023, which concluded that the Centre's transfers aligned precisely with the Commission’s guidelines each year.
On the matter of capital expenditure, Sitharaman noted that based on recommendations from state finance ministers, the 50-year capital expenditure loans for special assistance to states have been raised to Rs 2 lakh crore. The Centre’s total capital expenditure stands at Rs 12 lakh crore, but combined with state and union territory spending, it rises to Rs 17.1 lakh crore.
The Special Assistance Scheme for Capital Investment, under which interest-free loans are provided to state governments for capital projects, was also discussed. Sitharaman assured that the Centre remains committed to assisting states in meeting their infrastructure needs.
Additionally, the Finance Minister expressed the Centre's willingness to collaborate with states on the development of Mega Textile Parks, particularly in the industrial textiles sector. "New age textiles, like those used in car cushions, are becoming an integral part of the manufacturing sector. States interested in entering this area are encouraged to collaborate with us," she said.
Sitharaman also highlighted a robust credit flow to industries, including small and medium enterprises. She reported a 13.8% growth in total credit in the current financial year, with non-food bank credit increasing by 13% and NBFC credit rising by 15.4% as of January 15, 2026.
