Union Budget 2026: Centre allocates Rs 1.4 lakh cr for state local bodies, accepts vertical share of devolution at 41%

NEW DELHI: The Centre has allocated Rs 1.4 lakh crore for states for the Financial Year 2026-27 as Finance Commission grants, Union Finance Minister Nirmala Sitharaman said on Sunday.

Presenting the Union Budget 2026-27, FM Sitharaman said the Centre has accepted the 16th Finance Commission’s recommendation to retain the vertical share of devolution at 41 per cent.

She said, “The government has accepted the 16th Finance Commission recommendations to retain the vertical share of devolution at 41 per cent. I have allocated Rs 1.4 lakh crore for states for FY 2026-27 as Finance Commission grants. These include rural and urban local body and disaster management grants”.

Watch Live: Smt @nsitharaman presents Union Budget 2026–27 in Parliament #ViksitBharatBudget @sansad_tv @PIB_India https://t.co/DieMezvgTp

— Nirmala Sitharaman Office (@nsitharamanoffc) February 1, 2026

The 15th Finance Commission recommended a share of states in the central taxes to be 41 per cent, and the 16th Finance Commission has retained the vertical share of devolution.

In December 2025, for grants to rural bodies, the Centre released more than Rs 723 crore to Rajasthan and Jharkhand. This funding was allocated under the 15th Finance Commission to strengthen village-level institutions, according to a Ministry of Panchayati Raj press release.

The government allocated these funds to support local groups in carrying out important work in the areas. In Rajasthan, a total of Rs 303.0419 crore was released as the first part of the money for the financial year 2025-26. This specific amount was meant for 24 district panchayats, 339 block panchayats, and 3,857 gram panchayats.

Nirmala Sitharaman also proposed a Coconut Promotion Scheme aimed at increasing production and improving productivity to boost India’s competitiveness in coconut cultivation. She said the scheme will focus on major coconut-growing states and include measures such as replacing non-productive trees with new, high-yielding saplings.

“To further enhance competitiveness in coconut production, I propose a coconut promotion scheme to increase production and enhance productivity through various interventions, including replacing non-productive trees with new saplings or plants of varieties in major coconut-growing states,” Sitharaman said.

Khelo India Mission

The Finance Minister has proposed to launch the ‘Khelo India Mission’ which aims to create an integrated talent-development pathway, train coaches and support staff, incorporate sports science and technology, organise competitions and leagues, and develop sports infrastructure in India.

While presenting the budget, Nirmala Sitharaman stated that the sports sector offers diverse opportunities for employment, skill development, and careers. Building on the nurturing of sports talent through the ‘Khelo India’ programme, she announced the launch of the ‘Khelo India’ Mission to transform the sports ecosystem over the next decade.

The mission will focus on creating an integrated talent-development pathway with training centres at foundational, intermediate, and elite levels; systematically developing coaches and support staff; incorporating sports science and technology; organising competitions and leagues to create a sports culture and provide competitive platforms; and enhancing sports infrastructure for training and tournaments.

“The sports sector provides multiple means of employment, skilling and job opportunities. Taking forward the systematic nurturing of sports talent, which is set in motion through the Khelo India programme earlier, I propose to launch ‘Khelo India Mission’ to transform the sports sector over the next decade. The mission will facilitate: a) an integrated talent-development pathway supported by training centres, which are foundational, intermediate and elite levels; b) systematic development of coaches and support staff; c) integration of sports science and technology; d) competitions and leagues to promote sports culture and provide platforms and e) development of sports infrastructure for training and competition,” Nirmala Sitharaman said.

The ‘Khelo India’ initiative was proposed by the government of India in 2017 with the primary focus of creating a national-level platform for athletes to showcase their talent and to identify them for further grooming and financial support. The initiative also focused on building better sporting infrastructure and academies nationwide across various sports.

Under this movement, the Khelo India Youth Games (KIYG), the Khelo India University Games (KIUG), and the Khelo India Winter Games (KIWG) were established as annual national sports competitions in which young people representing their states and universities, respectively, showcased their skills and competed for medals. (ANI)

FM Sitharaman presented the Union Budget for record ninth time. (ANI)