The Union Budget 2026–27, presented on 01 February 2026, formally addresses the recommendations of the 16th Finance Commission, reinforcing India’s framework of fiscal federalism and Centre–State cooperation.
Key Announcements on the 16th Finance Commission
The 16th Finance Commission submitted its report on 17 November 2025
The Government has accepted the recommendation to retain the vertical devolution share at 41%
For FY 2026–27, an allocation of ₹1.4 lakh crore has been provided to States as Finance Commission Grants
These grants include:
Rural Local Body Grants
Urban Local Body Grants
Disaster Management Grants
Why This Matters
Ensures predictable and stable fund flow to States
Strengthens local governance institutions
Supports disaster preparedness and resilience
Reinforces cooperative federalism under the vision of Viksit Bharat
The Finance Commission framework plays a crucial role in balancing national priorities with state-level development needs, making it a cornerstone of India’s economic governance.
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