Budget 2026: States seek higher capex aid, GST loss compensation in pre-Budget talks with Sitharaman

New Delhi: States sought greater special assistance for capital investments, and enhanced support to compensate for revenue loss due to the recent goods and services tax (GST) cuts during a pre-budget meeting with finance minister Nirmala Sitharaman on Saturday. They also pushed for increased allocations for urban infrastructure and rural schemes, and a boost for housing programmes.

Sitharaman will present her ninth consecutive full budget for FY27 on February 1.

During the meeting, the minister underlined the need for states’ participation and nudged them to initiate reforms for achieving India’s vision of becoming a developed nation by 2047, officials present in the meeting told ET.The states also sought greater assistance to combat disasters and climate change, besides a special financial package for disaster-prone states, with the Centre set to consider and implement recommendations of the 16th Finance Commission this year, the officials said.

Connectivity Push in TelanganaKerala finance minister KN Balagopal asked for enhancing the borrowing ceiling for the state, which was curtailed citing off-budget borrowing. The state also raised issues including revenue decline after GST implementation, rubber price subsidy, paddy procurement price hike, railway development, Vizhinjam port and township development, and assistance for scheme workers. Balagopal said the Centre has curtailed over ₹17,000 crore due to the state this fiscal year.Sitharaman has also held pre-budget consultations with economists, industrialists, financial and capital market representatives, farmer associations, agriculture economists, as well as micro, small and medium enterprises. Earlier this week, she discussed suggestions with students at the Delhi School of Economics.Among states, Telangana has sought approval for building 2.5 million houses under the Pradhan Mantri Awas Yojana, setting up of an Indian Institute of Management, and speedy approvals and funding for major road and rail infrastructure projects, especially regional ring road, expansion of radial roads connecting districts to the capital Hyderabad and Bharat Future City, and central support for Phase-2 expansion of the Hyderabad Metro Rail on a 50:50 cost-sharing basis, said sources. Andhra Pradesh sought a dedicated Rayalaseema Horticulture Development Package and support for the proposed Polavaram–Nallamala Sagar link project.

The meeting was attended by the Manipur governor, chief ministers of Delhi, Goa, Haryana, Jammu and Kashmir, Meghalaya, and Sikkim, deputy chief ministers of Arunachal Pradesh, Madhya Pradesh, Odisha, Rajasthan, and Telangana, and finance ministers of other states and union territories. Union minister of state for finance Pankaj Chaudhary and senior finance ministry officials also attended the meeting.