Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman chairs the Pre-Budget Consultation Meeting with States and UTs (with legislature), New Delhi, today

1. At a Glance

• Annual pre-Budget consultation chaired by Union Finance Minister Smt. Nirmala Sitharaman with States/UTs (with legislature) ahead of Union Budget 2026-27 [1].
• Convened to gather State-level inputs on fiscal devolution, capex support, and sectoral demands — a key expression of cooperative fiscal federalism [1].
• Headline takeaway: States flagged SASCI (Special Assistance to States for Capital Investment) as critical for fast-tracking asset creation [1].

2. Why in the News

• Meeting held on 10 January 2026, New Delhi, just weeks before presentation of Union Budget 2026-27 [1].
• Continues the pre-Budget consultation tradition; the previous edition (2024-25 cycle) was held in Jaisalmer, Rajasthan [2].

3. Background & Evolution

• Pre-Budget consultations with States are an executive convention, not a constitutional requirement, conducted annually by the Department of Economic Affairs, Ministry of Finance.
• SASCI launched in 2020-21 as Atmanirbhar Bharat measure to push State capex via 50-year interest-free loans; cumulative release > ₹4.25 lakh crore since 2020-21 [3].
• Scheme expanded to 10 parts (Part-I to Part-X) in 2025-26, mixing untied and reform-linked components [4].

4. Core Static Facts

• Chair: Union FM Nirmala Sitharaman; MoS Finance: Pankaj Chaudhary [1].
• Attendees: Governor of Manipur; CMs of Goa, Haryana, Meghalaya, Sikkim, Delhi (UT), J&K (UT); Deputy CMs of Arunachal Pradesh, MP, Odisha, Rajasthan, Telangana; State FMs and other Ministers [1].
• SASCI 2025-26 outlay: ₹1.5 lakh crore total — ₹68,000 cr under Part-I (Untied) + ₹80,000 cr reform/sector-specific [4].
• Disbursed under SASCI 2025-26: ₹83,595 crore to States till 04.01.2026 [4].
• Budget 2026-27 SASCI outlay: ₹2.0 lakh crore as 50-year interest-free capex loans [3].
• Disaster carve-out: States hit by severe natural disasters (as assessed by Inter-Ministerial Central Team / IMCT) in FY 2024-25 may access up to 50% of Part-I allocation [4].
• Nodal ministry: Ministry of Finance, Department of Expenditure [4].

5. Multi-Dimensional Analysis

• Economic: SASCI crowds in State capex (States account for ~60% of general government capex); ₹2 lakh cr for FY 2026-27 signals counter-cyclical push amid 7.4% projected real GDP growth [3].
• Legal/Constitutional: Operates outside Finance Commission devolution under Article 280; uses Article 293(3) route for State borrowings (Centre's consent required) — interest-free loans bypass market-rate constraints.
• Administrative/Federalism: Reform-linked tranches (Part-II onwards) tie release to sector reforms (urban planning, land records, digitisation) — debated as conditional federalism.
• Ethical/Governance: Direct State-Centre dialogue increases transparency; however, opposition-ruled States historically allege uneven access — attendance of Delhi, J&K, Telangana (non-NDA) signals broad participation [1].

6. Recent Developments (last 12-18 months)

• 10 Jan 2026: Pre-Budget consultation with States/UTs (with legislature), New Delhi [1].
• FY 2024-25: 40 projects sanctioned in 23 States worth ₹3,295.76 crore under SASCI tourism component [5].
• 2023-24: Centre approved ₹56,415 crore for 16 States under SASCI 2023-24 [6].
• Budget 2026-27: SASCI outlay scaled to ₹2 lakh crore [3].

7. Prelims Hooks

• SASCI launched in FY 2020-21 as part of Atmanirbhar Bharat [3].
• SASCI loans are 50-year, interest-free to States [3].
• SASCI 2025-26 has 10 parts (I-X) [4].
• Part-I of SASCI is "Untied" — States choose projects [4].
• SASCI 2025-26 Part-I allocation: ₹68,000 crore [4].
• Cumulative SASCI release since 2020-21: > ₹4.25 lakh crore [3].
• SASCI 2026-27 budgeted outlay: ₹2 lakh crore [3].
• Disaster-hit States may draw up to 50% of Part-I allocation, certified by IMCT [4].
• Pre-Budget consultation 2024-25 cycle was held in Jaisalmer [2].
• Nodal department for SASCI: Department of Expenditure, Ministry of Finance [4].
• India's projected real GDP growth FY 2025-26: 7.4% [3].
• MoS Finance as of meeting: Pankaj Chaudhary [1].

8. Mains Relevance

• GS-II: Indian Polity & Governance — Centre-State financial relations; cooperative federalism.
• GS-III: Indian Economy — Government Budgeting; mobilization of resources; public finance.
• Plausible stems: 1. "Examine the role of the Scheme for Special Assistance to States for Capital Investment (SASCI) in strengthening fiscal federalism in India." (GS-II/III) 2. "Pre-Budget consultations with States have evolved into a key forum of cooperative fiscal federalism. Discuss." (GS-II) 3. "Conditional capex transfers risk eroding State autonomy. Critically evaluate in the context of SASCI." (GS-II)

9. Related Topics to Study Next

• 16th Finance Commission — concurrent devolution review.
• Article 293 & State borrowing limits — legal basis of interest-free loan model.
• FRBM Act, 2003 — fiscal deficit interaction with off-Budget loans.
• GST Council — parallel federal fiscal forum.
• NITI Aayog Governing Council — non-fiscal Centre-State coordination.
• Capex multiplier debate (RBI/Economic Survey) — rationale for capex push.
• Atmanirbhar Bharat package (2020) — origin of SASCI.
• PM Gati Shakti / National Infrastructure Pipeline — capex pipeline absorbing SASCI funds.

10. Common Errors / Trap Areas

• SASCI loans are interest-free, not grants — they add to State debt stock (though not to FRBM deficit calc in specific ways).
• SASCI is distinct from Finance Commission grants (Art. 280) and CSS transfers.
• Tenure is 50 years, not 40 or 25.
• Nodal body is Department of Expenditure, not Department of Economic Affairs or NITI Aayog.
• The meeting covers States/UTs with legislature (incl. Delhi, J&K, Puducherry) — UTs without legislature are excluded.