MP faces setback as Centre cuts annual share:₹5,000 crore earmarked for 10 cities; Simhastha special package denied

Madhya Pradesh’s share in central taxes has declined instead of increasing, resulting in a major financial setback for the state. From April 2026 to March 2031, MP is expected to incur an annual loss of nearly Rs 7,500 crore. Even in the current financial year ending March 31, 2026, the state will receive Rs 2,314 crore less than earlier estimates. The reduction follows the Centre’s acceptance of the 16th Finance Commission’s recommendations, under which MP’s share in central taxes has been reduced from 7.86% to 7.34%. Officials say this 0.503% cut directly translates into substantial revenue loss for the state. For the ongoing financial year, MP’s expected share has been revised down from Rs 1,11,662 crore to Rs 1,09,348 crore. The timing is particularly challenging as the state government is preparing to increase its contribution to the Viksit Bharat Guarantee for Rozgar and Ajeevika Mission Gramin (VB-G RAM G) scheme from 10% to 30%, adding further fiscal pressure. Capital expenditure may offset some losses Despite the reduced tax share, experts believe Madhya Pradesh could benefit from increased capital expenditure provisions in the Union Budget. The state is expected to receive around Rs 1.12 lakh crore as its share of central taxes this year, along with an estimated Rs 2,000 crore for infrastructure development. Finance Minister Nirmala Sitharaman, while presenting her ninth Union Budget on Sunday, announced a Rs 12 lakh crore allocation for infrastructure development in Tier-2 and Tier-3 cities. Around 10 cities in Madhya Pradesh fall under this category. ₹5,000 crore likely for development of 10 cities Financial analysts estimate that cities like Bhopal and Indore could together receive nearly Rs 7,000 crore, while other cities may get up to Rs 5,000 crore under this scheme. The funds will be used to strengthen roads, water supply systems, sewage management, and other basic infrastructure, improving the quality of life and attracting new investments. Additionally, one of the five proposed university townships in the country may be allotted to Bhopal. The state government is already developing an AI and Knowledge City near Bhouri, close to the airport. If approved as a university township, the proposal could be sent to the Centre immediately. No special package for Simhastha 2028 The state had sought a special package of Rs 20,000 crore for the Simhastha 2028 event. However, the Union Budget did not include any announcement regarding this demand, leaving the state disappointed on this front. Municipal bonds and AMRUT 2.0 boost Major municipal corporations in MP—Bhopal, Indore, Jabalpur, Gwalior and Ujjain—will be able to issue bonds worth Rs 1,000 crore and receive incentives of up to Rs 100 crore from the Centre. Under existing provisions, issuing bonds of up to Rs 200 crore attracts an 18% central incentive. Under the AMRUT 2.0 scheme, the Centre has released Rs 7,022 crore for 2025–26, focusing on water supply and sewerage. In Bhopal, projects worth Rs 194 crore have already begun, including a Rs 155 crore sewage network in Kolar and Bairagarh. A key initiative under the scheme is the deployment of ‘Mahila Amrut Mitras’. Learning from incidents like the Bhagirathpura tragedy in Indore, where contaminated water led to multiple deaths, the government plans to deploy 10,000 women through MP Urban Development Corporation to monitor water quality at the community level. ‘She-Mart’ to empower women entrepreneurs Extending the ‘Lakhpati Didi’ initiative, the Centre announced the launch of ‘She-Mart’, expected to benefit over 16 lakh women in Madhya Pradesh. These women-owned and operated marts will be set up in agri-clusters, allowing women to sell agricultural produce, handicrafts and products from small businesses. The scheme includes working capital support, low-interest credit, technical training, and 50 buyer-seller meets to help women connect directly with larger markets. New initiatives for farmers and students Opportunities for 75 lakh farmers: Special provisions have been made for over 75 lakh marginal and small farmers in MP. Alongside PM-Kisan benefits, the budget emphasizes drone technology, digital agriculture missions, and micro-irrigation to boost productivity and income. Girls’ hostels in every district: The Centre will fund the construction of one girls’ hostel in each of MP’s 55 districts. This is expected to significantly benefit students from tribal regions such as Alirajpur, Dhar, Jhabua, Betul and Mandla, where lack of accommodation often forces girls to drop out. Health and Industry in focus Trauma centers in all district hospitals: To ensure timely treatment for road accident victims, the Centre plans to establish fully equipped trauma centers in every district hospital. While some districts already have such facilities, the goal is to cover all 52 district hospitals in the state. Textile sector push: Chief Minister Dr Mohan Yadav welcomed the emphasis on textile sector reforms. He said the PM MITRA Park allotted to MP is expected to generate employment for 3 lakh people and benefit around 6 lakh farmers. Real estate sector raises concerns CREDAI has expressed concerns over the absence of a clear budget allocation for the Pradhan Mantri Awas Yojana and lack of concrete announcements for affordable housing. The organization estimates that affordable housing’s share in total housing supply could fall from 18% to 12%, impacting workers, young families and the middle class, especially in regions like Bhopal. MP ministers’ portfolios get major allocations Among the six MPs from Madhya Pradesh in the Modi Cabinet, departments led by Shivraj Singh Chouhan and Jyotiraditya Scindia received the highest allocations. The Rural Development Ministry saw a 21% budget increase, with over Rs 55,600 crore earmarked for the VB-G RAM G scheme alone. The Agriculture Ministry’s budget was raised to Rs 1.32 lakh crore. Meanwhile, the Communications and Development of North Eastern Region Ministry under Scindia received nearly Rs 1.68 lakh crore.