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 right to collect cesses and surcharges, saying the Constitution allowed it and the Centre would continue to use this provision. 

However, she also added that, over the last six years, the government has spent on the States 105% of what it had collected through 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 passed 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 said, in response to comments by several Members of Parliament about the Centre’s levy of cesses and surcharges that are not part of the divisible pool that is 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 said that the Centre has spent more on providing schools, hospitals, and roads than it has collected through the relevant cesses. She gave the examples of the Samagra Shiksha Midday Meal Scheme, and schemes under the National Food Security Act and National Health Mission. 

Spent more than collected

“Resources from many cesses are 100% transferred to States,” Ms. Sitharaman said. “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 said that, in the six-year period between 2019-20 and 2024-25, the Centre collected ₹15.14 lakh crore through various cesses and surcharges, and sent ₹15.97 lakh crore to the States under various 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 said. “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 performance

The Finance Minister also defended the government’s fiscal and debt management, saying that it compares favourably to what has happened in other large economies. 

She pointed out that the Centre’s fiscal deficit has been brought down to a projected 4.3% for 2026-27 from 9.3% in the COVID-19 pandemic-affected year 2020-21.

“Global comparison is also important,” Ms. Sitharaman noted. “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.”