Substantial drop in Central grants, Maha tells fin panel
Mumbai: While seeking a higher share for states from the taxes collected by the Centre, the Maharashtra govt has pointed out that it has experienced a "substantial reduction in grants from the Union government," which has added to its financial burden.
This is because of the end of GST compensation, the decline in the Centre's share of
Centrally sponsored schemes
and in the 15th finance commission grants, it has said.In its memorandum to the 16th finance commission submitted on Thursday, the state said that in 2024-25, Maharashtra received only Rs 31,830.3 crore as the total grants-in-aid from the Union govt, which was only 55.2% of the total estimate. By comparison, the grants-in-aid from the Centre in 2020-21 was much higher at Rs 52,733 crore.It also said that Maharashtra had not received 15th finance commission grants amounting to Rs 24,571 crore for the period 2020-26.
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"It is difficult to obtain these grants because they are mostly tied grants with many conditions which may not be suitable for the ground condition of various states," the memorandum said.With the Centre reducing its share in various Centrally sponsored schemes, the state has had to drastically increase its share, the memorandum pointed out. The state's share has risen from 23% in 2021-22 to 50% in 2023-24, it said. The state's allocation rose from Rs 11,314 crore to Rs 22,179 crore during this period.The ending of GST compensation from the Centre from 2022 placed a burden on the state since it is required to compensate urban local bodies, including the BMC. This is because their revenue, including octroi and local body tax, was abolished with the imposition of GST. For 2025-26, the state had made a provision of Rs 30,853 crore towards compensation to its urban local bodies. The state govt's memorandum also said that it faced a higher expenditure because of Central enactments like the 8th Central Pay Commission, the Unified Pension scheme and the National Food Security Act. The memorandum stated that once the Centre increased pay scales, the state had to do the same. In 2025-26, an estimated 44.2% of the state's revenue receipts were set to be spent on the salary and pension of employees.As a result of reduced grants from the Union government, Maharashtra sought a hike in the tax devolution from the Centre to states from the current 41% to 50% of the divisible pool. "The financial transfers to the state have not been commensurate with the growth in the gross revenue of the Union government. This, coupled with the increase in revenue expenditure has imposed a substantial financial burden on the state," the memorandum of the state government to the finance commission said.
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