The Financial Survey cited a research that estimated that such transfers amounting to 0.19-1.25% of the gross state home merchandise of States and 0.68%-8.26% of their complete budgetary expenditures. Picture for illustration solely.
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In a 12 months when 4 main States are going for Meeting elections, solely one in every of which is dominated by the Bharatiya Janata Celebration (BJP), the Financial Survey 2025-26 has come out strongly towards “unconditional money transfers” (UCT), together with to ladies. It highlighted that whereas these have short-term beneficial properties, additionally they increase considerations about fiscal sustainability and medium-term progress.
Notably, final 12 months’s version of the Survey had famous that money transfers and loans to focused poorer and lower-income households had been having constructive results on consumption, permitting these households to fund varied primary wants and debt repayments.
West Bengal, Tamil Nadu, Kerala, and Assam are going for elections in 2026, as is Puducherry.
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Rising money transfers
The Survey famous that combination spending on UCT programmes, notably for ladies, is estimated at about ₹1.7 lakh crore for the present monetary 12 months 2025-26. It added that the variety of States implementing them elevated greater than five-fold between 2022-23 and 2025-26, with round half of them estimated to be in income deficit.
The Survey additional cited a research that estimated that such transfers amounting to 0.19-1.25% of the gross state home merchandise of States and 0.68-8.26% of their complete budgetary expenditures.
“It’s argued that money transfers present quick earnings assist, serving to ladies meet unmet well being and private wants,” the Survey mentioned. “Some view it as a return for his or her unpaid contribution to the GDP. Nevertheless, their speedy scale-up and persistence increase considerations about fiscal sustainability and medium-term progress, notably when not complemented by investments in employment, abilities, and human capital.”
Financial Survey 2025-26: Comply with LIVE updates on January 29, 2026
Growing fiscal burden on States
The Survey famous that income expenditure continues to account for the majority of State spending, accounting for 84% of their complete expenditure in 2023-24, albeit considerably decrease than the 86% in 2018-19.
“Inside income expenditure, nevertheless, the composition has undergone a notable shift, with an growing tilt in direction of unconditional money transfers and different dedicated outlays,” the Survey mentioned.
“As these transfers take up a rising share of accessible fiscal area, the scope for increasing productive capital expenditure turns into more and more constrained, particularly in an setting of restricted revenues and elevated deficits,” it added.
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The fiscal trade-off
The Survey identified the trade-off dealing with States: extra spending by States will crowd out sources for essential social and bodily infrastructure, except States enhance their deficits. Nevertheless, deficits themselves can not enhance with out additional deteriorating the monetary well being of the States.
“These trade-offs are bolstered by programme design: many schemes lack sundown clauses or periodic evaluations, growing rigidity in income expenditure,” the Survey mentioned. “In consequence, capital expenditure, whose progress influence is stronger and extra sturdy, typically turns into the casualty when fiscal pressures intensify, with antagonistic implications for medium-term progress.”
Revealed – January 29, 2026 09:02 pm IST
