Budget 2026–27 exposes strains in India’s fiscal federalism as the Centre retains policy control while shifting welfare costs to States through unfunded mandates and CSS changes. Non-shareable cesses shrink States’ revenues, social spending stagnates, and a capex-first approach sidelines human capital, prompting calls to rationalise cesses and revive cooperative federalism.
Click to View MoreFiscal federalism in India is strained by shrinking state autonomy, centralization of revenues under GST, and rising cesses that narrow the divisible pool. To restore balance, the 16th Finance Commission must expand untied transfers, streamline CSS, and rebuild fiscal trust for equitable regional development.
Click to View MoreThe Supreme Court’s order restoring MGNREGS funding to West Bengal reinforces the right to work and judicial oversight in welfare delivery. Arising from fiscal federalism tensions, it stresses the need for stronger social audits and cooperative Centre-State relations to safeguard rural livelihoods and accountability.
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