States have raised significant concerns about deteriorating fiscal conditions and mounting revenue pressures during a pre-Budget consultation meeting with Finance Minister Nirmala Sitharaman. The meeting, attended by finance ministers and senior representatives from several states and Union Territories, highlighted the financial challenges facing state governments ahead of the Union Budget 2026-27.

GST Rate Cuts Impact State Revenues

States flagged that mid-year GST rate cuts have led to substantial revenue losses, creating budgetary constraints despite the measures being described as pro-people. The GST rationalisation, while benefiting consumers, has significantly impacted state finances and limited their fiscal room for spending on essential programs and development initiatives.

Compensation and Revenue Sharing Demands

Several states sought compensation or a share in new cess or excise revenues to offset the revenue shortfall. Particular emphasis was placed on products such as tobacco and paan masala, with states arguing that such levies contribute meaningfully to overall collections but provide limited direct relief to state revenues under the current framework.

States highlighted the disconnect between central revenue collection and state-level benefits, urging for a more equitable distribution mechanism that would help address their fiscal constraints.

Centre-State Funding Structure Concerns

States called for a fairer Centre-State funding structure for centrally sponsored schemes, pointing to the pressure created by existing cost-sharing arrangements. The current framework was described as placing undue burden on state finances, particularly given their already constrained fiscal position.

Demands were raised for:

• Higher capital expenditure support from the Centre
• Greater clarity on long-term funding commitments
• Better planning and execution capabilities through improved funding mechanisms

Budget 2026-27 Timeline

Finance Minister Sitharaman will present the Union Budget 2026-27 on February 1, 2026, marking an unusual occurrence as it will be presented on a Sunday for the first time in decades. The Economic Survey is scheduled to be tabled on January 20, ahead of the budget presentation.

The budget session has received approval from President Droupadi Murmu on the Union government's recommendation, with Kiren Rijiju announcing the session details on social media platform 'X'.

The concerns raised by states during the pre-Budget consultation underscore the complex fiscal challenges facing both central and state governments, with states urging that their fiscal constraints be factored into upcoming Budget decisions.

Finance Minister Nirmala Sitharaman will create parliamentary history when she presents Budget 2026 on a Sunday, marking the first time in India's legislative history that the Union Budget will be presented on a weekend. This unprecedented scheduling breaks from traditional weekday presentations that have been the norm since India's budget presentations began.

Historic Milestone in Parliamentary Proceedings

The Sunday presentation represents a significant departure from established parliamentary conventions. Unlike previous weekend presentations in 1987 and 1999, this marks the first Sunday budget presentation in the country's parliamentary history. This will be Sitharaman's ninth budget presentation, positioning her just one presentation away from matching Morarji Desai's record of 10 budgets.

Evolution of Budget Timing and Process

The current budget presentation timing reflects a major policy shift implemented in 2017. The government moved the presentation date from the conventional end of February to February 1, marking the 10th anniversary of this pragmatic decision. This change enables parliamentary scrutiny of the budget, completion of the legislative process, and allows the government to access treasury funds from April 1, eliminating the need for a mandatory vote-on-account.

The Budget session structure demonstrates this streamlined approach:

Constitutional and Historical Context

Interestingly, the term "Budget" does not appear in the Indian Constitution. Article 112 refers to the "Annual Financial Statement," while the word "Budget" is mentioned in the Rules of Procedure and Conduct of Business of the Lok Sabha. This linguistic distinction highlights the formal constitutional framework underlying India's annual financial exercise.

Journey from Colonial Legacy to Independent India

India's budget presentation tradition began during British rule when WM Hailey presented the first annual financial statement to the Central Legislative Assembly on March 1, 1921. The Government of India Act granted conditional power to the House to provide or withhold assent to proposed expenditures. The last British India budget was presented in February 1947 and passed in March.

Post-independence, Finance Minister R K Shanmukham Chetty had the honor of presenting independent India's first budget on November 26, 1947. This historic presentation covered the period from August 15, 1947, to March 31, 1948:

Notable Parliamentary Precedents

Several unique situations have shaped India's budget presentation history. In 1952, Finance Minister C D Deshmukh presented two budgets in one year due to the transition to elected Parliament. Prime Ministers have occasionally presented budgets when holding concurrent finance portfolios - Jawaharlal Nehru in 1958, Indira Gandhi in 1970, and Rajiv Gandhi in 1987.

The Railway Budget maintained separate presentation from 1924 to 2017, following a Central Legislative Assembly resolution. This practice, stemming from a 1921 suggestion to separate railway finance from general finance, was eventually integrated into the general budget.

Modern Parliamentary Procedures

Contemporary budget scrutiny has evolved significantly since 1993, when Departmental Related Standing Committees took over the examination of demands from direct Lok Sabha discussions. This system, formalized during the 10th Lok Sabha under Speaker Shivraj Patil, enables detailed ministry-wise analysis during the budget session break.

Sitharaman has also overseen presentation format transitions, moving from traditional briefcases to red-wrapped covers symbolizing "Bahi-Khata" (traditional bookkeeping) in 2019, and subsequently to tablet-based presentations, advancing Parliament's digitization efforts.