The Budget has projected an increase of about Rs 7,000 crore on this score to Rs 81,256 crore. (The amount and nature of the assistance in this case was determined by negotiation between the Centre and respective State governments.) Another third of the total grants and loans given to States is for non-Plan purposes. The Budget projects an increase of about Rs 10,000 crore on this count to Rs 48,659 crore, over 2008-09 revised estimates.

The rest is given as assistance for Centrally sponsored programmes. The assistance to States under Centrally sponsored schemes has been pared by about Rs 3,000 crore over 2008-09 budget estimates, to Rs 22,136 crore. The budgeted sum for this fiscal is just Rs 159 crore higher than the revised estimates for 2008-09.

Tax transfers to States are down by Rs 6,758 crore over the Interim Budget’s estimates presented on February 28. This is because of the downward revision in growth projections. The Interim Budget projected a nominal growth of 10.97 per cent, which has now been brought down to 10.05 per cent. As a result, tax receipts for 2009-10 were estimated at Rs 4,97,596 crore in the Interim Budget, Rs 23,378 crore higher than the estimates put out in the Budget.

However, estimates of non-tax proceeds for 2009-10, on which the States have no claim, have been revised upwards in relation to the Interim Budget, from Rs 1,11,955 crore to Rs 1,40,279 crore in the Budget. The rise is largely on account of increase in dividends paid by the Reserve Bank of India and other scheduled commercial banks, besides proceeds from 3G auctions.

Mr Pranab Mukherjee, Union Finance Minister, said in his Budget speech: “The economic recovery and growth is a cooperative effort of the Central and State governments. That is why, for the first time, I held a meeting with the finance ministers of States as part of the preparations for this Budget. I intend to make this an annual feature.”