Presenting the Union Budget on February 1, 2026, Sitharaman said the 16th Finance Commission had submitted its report to the President on November 17, 2025. Under Article 281 of the Constitution, the government is required to table the Commission’s report in Parliament along with an explanatory memorandum detailing the action taken on its recommendations.
She said the government had accepted the Commission’s recommendation to retain the Centre’s share in tax devolution at 41 per cent.
“As recommended by the Commission, I have provided Rs 1.4 lakh crore to the States for the FY 2026-27 as Finance Commission Grants. These include rural and urban local body and disaster management grants,” the finance minister said.
In its report, the Commission said it had taken into account actual disaster-related expenditure incurred by states over several years while allocating funds to the National Disaster Fund. This included spending between 2015-16 and 2023-24, revised estimates for 2024-25 and budget estimates for 2025-26.
These figures were adjusted upwards by 5 per cent to account for inflation, after which the average expenditure over the past 11 years was increased by a further 10 per cent. This resulted in an allocation of Rs 14,370 crore for disaster-related spending in 2026-27.