Constitution makers knew what they were doing: FM Sitharaman defends Centre’s cess collections

Finance Minister Nirmala Sitharaman on Wednesday (March 25, 2026) emphatically reiterated the Centre’s proper to gather cesses and surcharges, saying the Constitution allowed it and the Centre would proceed to make use of this provision. 

However, she additionally added that, during the last six years, the federal government has spent on the States 105% of what it had collected by means of cesses and surcharges. That is, its spending has exceeded its collections. 

Parliament Budget Session updates on March 25, 2026

She was replying to the Lok Sabha debate on the Finance Bill 2026, which was handed on Tuesday following the conclusion of her speech.

‘We will do it’

“The Constitution makers knew what they are doing, and we all pay respects to them,” Ms. Sitharaman stated, in response to feedback by a number of Members of Parliament concerning the Centre’s levy of cesses and surcharges that aren’t a part of the divisible pool that’s shareable with the States. 

“There is a provision for levying cesses and surcharges, which is given to the Central Government,” she added. “There is a provision for us to use it, we will use it, just as there are several provisions given to the States to levy tax on certain items, which has nothing to do with the divisible pool.”

Further, the Union Finance Minister stated that the Centre has spent extra on offering faculties, hospitals, and roads than it has collected by means of the related cesses. She gave the examples of the Samagra Shiksha Midday Meal Scheme, and schemes beneath the National Food Security Act and National Health Mission. 

Spent greater than collected

“Resources from many cesses are 100% transferred to States,” Ms. Sitharaman stated. “In fact, if it was part of the divisive pool, they would only get 41% of it. I want to underline the fact that 105% utilisation has happened. We spend more than what we collect.” 

She stated that, within the six-year interval between 2019-20 and 2024-25, the Centre collected ₹15.14 lakh crore by means of numerous cesses and surcharges, and despatched ₹15.97 lakh crore to the States beneath numerous schemes. 

“Similarly, with regard to the Health and Education Cess, ₹74,000 crore extra has been spent over and above what has been collected under the cess,” Ms. Sitharaman stated. “What was collected, Rs 7.03 lakh crore was collected between 2014-15 and 2026-27. Against this, the total utilisation stands at ₹7.7 lakh crore.” 

Fiscal efficiency

The Finance Minister additionally defended the federal government’s fiscal and debt administration, saying that it compares favourably to what has occurred in different massive economies. 

She identified that the Centre’s fiscal deficit has been introduced right down to a projected 4.3% for 2026-27 from 9.3% within the COVID-19 pandemic-affected yr 2020-21.

“Global comparison is also important,” Ms. Sitharaman famous. “Since 2008, the world’s overall debt burden has increased 41%. China’s debt exploded 139%. India has actually reduced its total debt burden by 4% of GDP.”

“The US’ debt-to-GDP ratio stands at 124%, China at 88%, Japan at over 250%,” she added. “India’s combined figure [Centre and States combined], the debt-to-GDP is 83% approximately. It is lower than most major economies and is on a declining path.”