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In a twelvemonth erstwhile 4 large States are going for Assembly elections, lone 1 of which is ruled by the Bharatiya Janata Party (BJP), the Economic Survey 2025-26 has travel retired powerfully against “unconditional currency transfers” (UCT), including to women. It highlighted that portion these person short-term gains, they besides rise concerns astir fiscal sustainability and medium-term growth.
Notably, past year’s variation of the Survey had noted that currency transfers and loans to targeted poorer and lower-income households were having affirmative effects connected consumption, allowing these households to money assorted basal needs and indebtedness repayments.
West Bengal, Tamil Nadu, Kerala, and Assam are going for elections successful 2026, arsenic is Puducherry.
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Rising currency transfers
The Survey noted that aggregate spending connected UCT programmes, peculiarly for women, is estimated astatine astir ₹1.7 lakh crore for the existent fiscal twelvemonth 2025-26. It added that the fig of States implementing them accrued much than five-fold betwixt 2022-23 and 2025-26, with astir fractional of them estimated to beryllium successful gross deficit.
The Survey further cited a survey that estimated that specified transfers amounting to 0.19-1.25% of the gross authorities home products of States and 0.68-8.26% of their full budgetary expenditures.
“It is argued that currency transfers supply contiguous income support, helping women conscionable unmet wellness and idiosyncratic needs,” the Survey said. “Some presumption it arsenic a instrumentality for their unpaid publication to the GDP. However, their accelerated scale-up and persistence rise concerns astir fiscal sustainability and medium-term growth, peculiarly erstwhile not complemented by investments successful employment, skills, and quality capital.”
Economic Survey 2025-26: Follow LIVE updates connected January 29, 2026
Increasing fiscal load connected States
The Survey noted that gross expenditure continues to relationship for the bulk of State spending, accounting for 84% of their full expenditure successful 2023-24, albeit somewhat little than the 86% successful 2018-19.
“Within gross expenditure, however, the creation has undergone a notable shift, with an expanding tilt towards unconditional currency transfers and different committed outlays,” the Survey said.
“As these transfers sorb a rising stock of disposable fiscal space, the scope for expanding productive superior expenditure becomes progressively constrained, particularly successful an situation of constricted revenues and elevated deficits,” it added.
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The fiscal trade-off
The Survey pointed retired the trade-off facing States: further spending by States volition assemblage retired resources for captious societal and carnal infrastructure, unless States summation their deficits. However, deficits themselves cannot summation without further deteriorating the fiscal wellness of the States.
“These trade-offs are reinforced by programme design: galore schemes deficiency sunset clauses oregon periodic reviews, expanding rigidity successful gross expenditure,” the Survey said. “As a result, superior expenditure, whose maturation interaction is stronger and much durable, often becomes the casualty erstwhile fiscal pressures intensify, with adverse implications for medium-term growth.”
