Budget 2022: Centre's move to ramp up state finances tight-fisted

Devolution to grow 13% to Rs 8.1 trn in FY23. Power reforms to allow borrowing up to 4% of GSDP in addition to Rs 1 trn capex loans. But funding for centrally-sponsored schemes stagnates

The Union Budget 2022-23 has given states reasons to cheer in terms of interest free capex loans worth Rs 1 trillion, but it has also held a tight fist in terms of devolution and financing centrally sponsored schemes, ultimately affecting cash flow from Centre to states.

Capitalising on its successful experiment of providing back to back loan to states in lieu of compensation due to shortfall in goods and services tax (GST) revenues, the Centre provided a similar loan assistance to states for capital expenditure last year. Raising it from Rs 10,000 crore to Rs 15,000 crore for this fiscal,