Budget 2022: Is the Centre trying to mend fences with Opposition-ruled states?

Amid a standoff between Centre and Opposition-ruled states, the Centre, in its Budget that was presented on February 1, has tried to bridge the divide between the two. This was very visible not just in the Budget but even after the presentation of the Budget by Finance Minister Nirmala Sitharaman.

Following the Budget, Prime Minister Narendra Modi was seen walking across the aisle in the Parliament and having a conversation with Opposition leaders.

Moreover, the Centre has added a slew of initiatives in the Union Budget 2022-22 to extend support to the states on capital expenditure, asset creation and infrastructure development among others.

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“Reflecting the true spirit of cooperative federalism, the Central Government is committed to bolstering the hands of the states in enhancing their capital investment towards creating productive assets and generating remunerative employment…in deference to the requests received during my meeting with Chief Ministers and state Finance Ministers, the outlay for this scheme is being enhanced from Rs 10,000 crore in the Budget Estimates to Rs 15,000 crore in the Revised Estimates for the current year,” said Sitharaman.

The government has announced schemes that give assistance to the states in various sectors like infrastructure, education, etc. Sitharaman, in her Budget speech, made a commitment to work with the state governments to cut the time needed for approvals to push affordable housing under the PM GatiShakti National Master Plan.

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Apart from that, for urban capacity planning, support will be provided to the states to reduce the time required for all land and construction-related approvals, for promoting affordable housing for the middle-class and economically weaker sections in urban areas. “We shall also work with the financial sector regulators to expand access to capital along with a reduction in the cost of intermediation,” she added.

The involvement of states has been sought for the next phase of ‘Ease of Doing Business 2.0’ and ‘Ease of Living’. The government also sought to bridge the gap between the state and Central government employees by increasing the tax deduction limit to 14 per cent from 10 per cent on employer’s contribution to the National Pension System.

The tussle between the states and Centre has been going on for a long time over issues ranging from use of investigative agencies to amendments to the rules of IAS, IPS officers, and with the announcements on the Budget day, the Centre is hoping to mend fences with the states.

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