PUDUCHERRY: The Puducherry government has urged the centre to increase its annual normal central assistance to the union territory by 10% from the 2026-27 financial year, pending its inclusion under the ambit of the Finance Commission.
In a memorandum submitted on behalf of Chief Minister N Rangasamy at the NITI Aayog Governing Council Meeting in New Delhi, Puducherry government urged the centre to provide a special financial package for major infrastructure projects, stating that the union territory's existing financial resources are insufficient to meet its development requirements within a reasonable timeframe.
Puducherry has maintained a separate public account since December 2007, in accordance with directions of the Union Ministries of Home Affairs and Finance. Based on this status, the government reiterated its demand for inclusion within the ambit of the central Finance Commission and sought an interim 10% enhancement in annual central assistance until such inclusion is achieved.
In a release, the CM stated that even with current funding sources, it would take nearly two decades to complete its present infrastructure needs. It therefore requested additional assistance, over and above the Scheme of Special Assistance to States for Capital Investments (SASCI), with funds ring-fenced for large-scale projects to create a strong foundation for a Viksit Puducherry.
The SASCI provides 50-year interest-free loans for infrastructure projects. During 2025-26, Puducherry received Rs 291.58 crore out of the Rs 481.57 crore sanctioned under various components of the scheme. In the current financial year, the UT has been allocated Rs 122 crore under Part I of SASCI.
The memorandum stated that Puducherry's small geographical area, limited consumption base, and restricted scope for tax mobilisation following the implementation of GST have constrained revenue generation. It also lacks natural resources that could provide additional income.
Highlighting its commitment to infrastructure spending, the administration said capital expenditure has increased from 1% in 2021 to 5.84% in 2025-26, with a proposal to raise it further to 10% in 2026-27. The government noted that infrastructure development is essential for harnessing Puducherry's demographic dividend and promoting inclusive growth.
