Special Correspondent: Arun Sharma New Delhi

In a significant administrative move, the Centre has decided that no funds will be released directly to states without a formal proposal or demand, signalling a shift toward stricter fiscal discipline and tighter monitoring of public expenditure.


According to government sources, the revised mechanism aims to ensure transparency, prevent idle allocation of resources, and strengthen financial accountability. Under the new arrangement, funds will be routed through the Treasury system and disbursed strictly on the basis of requirement and approved proposals.


Government’s Rationale
Officials in the Ministry of Finance argue that, in several instances, allocated funds remained unspent for extended periods or were not utilised in accordance with intended objectives. By linking disbursement to specific demands and utilisation plans, the government believes it can reduce unnecessary fiscal pressure and improve resource management.


The move is also expected to enable closer monitoring of scheme implementation and enhance outcome-based evaluation of projects.


Opposition’s Concerns
Opposition parties have criticised the decision, describing it as an encroachment on states’ financial autonomy. They argue that the measure could undermine the spirit of cooperative federalism and slow down the execution of development programmes, particularly in states that depend heavily on central assistance.


Broader Implications
Political analysts suggest that the decision could reshape Centre–State fiscal dynamics in the coming months. Much will depend on how states respond to the revised framework and whether the new system improves efficiency without affecting the pace of development.


The policy shift has opened up a fresh debate on financial governance, transparency, and the balance of powers within India’s federal structure.