Defending the Centre’s right to levy cesses and surcharges, Finance Minister Nirmala Sitharaman on Tuesday said the government is exercising a legitimately provided provision and has fully transferred these funds to states. However, she flagged concerns over the utilisation of these funds by several states.
She highlighted that in the last six years (2019–20 to 2024–25), the cumulative utilisation of cesses has exceeded collections. While the Centre collected Rs 15.14 lakh crore, it sent Rs 15.97 lakh crore to states under various schemes.
She added that under the health and education cess, an additional Rs 74,000 crore has been spent over and above the amount collected. Rs 7.03 lakh crore was collected between 2014–15 and 2026–27, while the total utilisation stood at Rs 7.77 lakh crore. So, more than what is collected under cesses and surcharges is being spent,” she noted.
She said that schemes such as Samagra Shiksha and the Mid-Day Meal Scheme, implemented through state governments, are financed through the health and education cess. “Even in the recent Supplementary Demand for Grants, which was passed in this House only a few days ago, Rs 11,627 crore was transferred to PM Swasthya Suraksha Nidhi to meet NHM expenditure. So, resources from many cesses are 100% transferred to states,” Sitharaman said.
The minister was responding to the debate on the Finance Bill, 2026 in the Lok Sabha.
She criticised the West Bengal government for underutilisation or non-utilisation of funds under several central schemes such as Pradhan Mantri Cha Shramik Protsahan Yojana, PM-KISAN Yojana, and Ayushman Bharat.
Addressing broader fiscal concerns, Sitharaman said debt should be assessed relative to GDP, noting the Centre’s target to reduce the debt-to-GDP ratio to around 50% by 2030–31. However, she emphasised that the onus lies equally on states to bring down debt.
“The Centre-State debt of 84.2% of GDP is also because states are contributing to the overall debt. The Centre has oversight over states and can advise them not to borrow beyond their FRBM (Fiscal Responsibility and Budget Management) limits. But the Centre alone cannot fully control state borrowings,” the minister said.