Sitharaman clarified that this support package was separate from recommendations made by the Finance Commission. Despite not being part of the Commission’s framework, the Centre went ahead with the scheme as a dedicated capital investment fund to help states rebuild, revive stalled projects, and stimulate economic recovery. According to her, states have collectively received ₹4.24 lakh crore under this mechanism since 2020.
Reaffirming the Centre’s commitment to cooperative federalism, the finance minister stressed that no state is ever allocated less than what is constitutionally due under Finance Commission guidelines. The special fund, she noted, was an additional cushion intended to ensure that states did not face a financial vacuum at a time when revenues collapsed and public spending demands surged.
The programme remains one of the longest-tenure and most concessional financial arrangements offered by the Union government, underscoring the depth of the Centre’s intervention during the pandemic years. Sitharaman’s remarks highlight the lasting impact of Covid-19 on India’s fiscal landscape and the central government’s effort to stabilise state finances as they continue rebuilding their economies.
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