Dehradun : The 16th Finance Commission, which visited Uttarakhand, has praised the state's financial management.
Commission Chairman Dr Arvind Panagariya said, "If there is a balanced fiscal deficit in any developing state, then it is not a bad situation. It is important to take care that this deficit does not increase."
A balanced fiscal deficit occurs when a government's total expenditure equals its total revenue, excluding borrowing. This means the government is not spending more than it earns and is not accumulating debt.
Uttarakhand Chief Minister Pushkar Singh Dhami on Monday presented the state's stand in detail on the financial conditions, challenges and development needs of the state in a meeting with the Chairman of the 16th Finance Commission, Dr Arvind Panagariya and other members at the Secretariat, said an official statement.
Speaking to the reporters at the Media Centre in the Secretariat on Monday, Dr Arvind Panagariya said, "The per capita income of Uttarakhand is good. It is more than the national average. It can be increased further. In response to a question, he said that all the commissions formed to date have made arrangements keeping in mind the specific geographical conditions of the Himalayan states. He explained in detail the tax sharing system between the Centre and the states. He said that the Finance Commission determines the method and formula to divide the income obtained from tax between the Centre and the states in accordance with the constitutional system and requirements."
"The formula presented by the Commission for tax division between the Centre and the states, parameters have been set for determining the revenue share. 12.5 per cent has been kept for demographic performance (based on low fertility rate), 45 per cent for income difference, 15 per cent each for population and area, 10 per cent for forest and ecology, and 2.5 per cent for tax and fiscal management. In response to a question, he said that full attention is paid to developing local bodies and panchayats during budget allocation. It also depends on how the states work according to the released budget," Panagariya said.
Finance Minister of Uttarakhand, Premchand Aggrawal, presented the Budget for the state for the financial year 2025-26 on February 20, 2025.
The Gross State Domestic Product (GSDP) of Uttarakhand for 2025-26 (at current prices) is projected to be Rs 4,29,308 crore, amounting to growth of 13% over the revised estimate for 2024-25.
Expenditure (excluding debt repayment) in 2025-26 is estimated to be Rs 75,170 crore, an increase of 9% over the revised estimate for 2024-25. In addition, debt of Rs 26,006 crore will be repaid by the state.
Receipts (excluding borrowings) for 2025-26 are estimated to be Rs 62,565 crore, an increase of 6% as compared to the revised estimate for 2024-25.
Revenue surplus in 2025-26 is estimated to be 0.6% of GSDP (Rs 2,586 crore), as compared to a revenue surplus of 0.8% of GSDP (Rs 2,852 crore) at the revised estimate stage in 2024-25.
Fiscal deficit for 2025-26 is targeted at 2.9% of GSDP (Rs 12,605 crore). In 2024-25, as per the revised estimate, fiscal deficit is expected to be 2.5% of GSDP, higher than the budgeted estimate of 2.4% of GSDP.
In the meeting held at the Secretariat, the Chief Minister met the Chairman of the Finance Commission Dr Arvind Panagariya, Commission members Anne George Mathew, Dr Manoj Panda, Dr Soumya Kanti Ghosh, Secretary Ritwik Pandey, Joint Secretary KK present in the special meeting organised to establish better financial coordination between the Central Government and the States. Mishra was welcomed on his arrival in Devbhoomi Uttarakhand in this silver jubilee year of establishing the state of Uttarakhand.