Union Finance Minister Nirmala Sitharaman on Sunday announced that the central government will give Rs 1.4 lakh crore as Finance Commission Grant to the states in the financial year 2026-27, after approving the key recommendations of the 16th Finance Commission. Presenting the Union Budget 2026-27, Sitharaman said that the government has accepted the recommendation of the 16th Finance Commission that the vertical share i.e. distribution of taxes between the Center and the states should be kept at 41 percent. I have made a provision to give Rs 1.4 lakh crore to the states as Finance Commission Grant for the financial year 2026-27. This also includes rural and urban local bodies and disaster management grants.
This decision takes forward the framework set by the 15th Finance Commission, in which the states’ share in central taxes was fixed at 41 percent. The new commission has also decided to maintain the same vertical distribution ratio. Along with this major financial announcement, Sitharaman also outlined a new coconut promotion scheme to further strengthen India’s position in coconut cultivation. He said that to further improve the competitiveness in coconut production, I propose a Coconut Promotion Scheme to increase production and yield through various measures. This also includes replacement of useless or low-yielding trees with new varieties of saplings in major coconut producing states.
Earlier announcements
Earlier in December 2025, the Central Government had released more than Rs 723 crore to Rajasthan and Jharkhand for rural local bodies under the 15th Finance Commission. According to a press release from the Ministry of Panchayati Raj, this assistance was given to strengthen village-level institutions and help them carry out important development work.
Out of this, Rajasthan received Rs 303.0419 crore as the first installment for the financial year 2025-26. This amount was fixed for 24 district panchayats, 339 block panchayats and 3,857 gram panchayats. This presentation of Finance Minister Sitharaman was considered special, because she presented the Union Budget for the record ninth time. While this showed continuity in financial policies, new schemes were started to improve the financial condition of the states and agricultural production.
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