**Executive Summary**
This document presents the Government of India's response to a parliamentary question regarding financial assistance to the State of Mizoram. The response outlines the mechanisms by which the Union Government assesses and provides financial support to states, including Mizoram. Key aspects include tax devolution based on Finance Commission recommendations, revenue deficit grants, and special assistance for capital expenditure, covering the period from 2020-21 to 2025-26.
**Key Points / Main Content**
* **Financial Condition Assessment:**
* The Finance Commission assesses the financial condition of States every five years, considering revenue, expenditure, and financial needs.
* The Commission recommends devolution of central taxes & duties and grants.
* **Tax Devolution to States:**
* Based on Finance Commission recommendations, tax devolution to States has increased from 32% to 42%.
* The 15th Finance Commission maintained this level, adjusting for Jammu and Kashmir.
* **Revenue Deficit Grant:**
* States, including Mizoram, have been provided Revenue Deficit Grants to bridge the gap between expenditure and revenue.
* **Fiscal Responsibility:**
* All States, including Mizoram, have enacted Fiscal Responsibility and Budget Management (FRBM) Acts to ensure fiscal prudence and stability.
* Compliance with FRBM Acts is monitored by State Legislatures.
* The Department of Expenditure considers fiscal limits as per Finance Commission recommendations when approving State borrowings.
* **Schemes for Assistance:**
* The Union Government provides funds under the Schemes for Special Assistance to States for Capital Expenditure/Investment (SASCI).
* Rs. 3,243.35 crore has been released to Mizoram under SASCI from 2020-21 to 2025-26 till 29.01.2026.
* Additional Central Assistance (ACA) for Externally Aided Projects (EAPs) is provided to Mizoram as 90% grant and 10% as loan.
**Impact Analysis**
**Mizoram State Government**
* **Impact:**
* Benefits from increased tax devolution, Revenue Deficit Grants, and SASCI funding.
* Subject to fiscal responsibility requirements under the FRBM Act. Receives ACA for Externally Aided Projects (EAPs) as 90% grant and 10% as loan.
* **Action Required:**
* Maintain compliance with the FRBM Act.
* Utilize funds from SASCI for capital expenditure/investment.
* Manage fiscal operations in a prudent and transparent manner.
**Finance Commission**
* **Impact:**
* Mandate to assess states' financial conditions and recommend tax devolution and grants every five years.
* **Action Required:**
* Continue to assess states' financial conditions and provide recommendations.
**Department of Expenditure, Ministry of Finance**
* **Impact:**
* Responsible for monitoring states' compliance with FRBM Acts and considering fiscal limits when approving state borrowings.
* **Action Required:**
* Monitor states' compliance with FRBM Acts.
* Consider fiscal limits as per Finance Commission recommendations when approving state borrowings.
Key Entities Referenced
Finance Commission: A body that assesses the financial condition of States, recommends devolution of central taxes and duties, and grants to be made to States.
Mizoram: The State that is the subject of the financial assistance discussed.
Ministry of Finance: The central ministry responsible for considering fiscal limits and approving borrowings by States.
Fiscal Responsibility and Budget Management (FRBM) Act: Legislation enacted by States, including Mizoram, to ensure fiscal prudence and stability.
Schemes for Special Assistance to States for Capital Expenditure/Investment (SASCI): A scheme providing funds to States for capital expenditure/investment.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF EXPENDITURE
LOK SABHA
UNSTARRED QUESTION NO. 1566
TO BE ANSWERED ON MONDAY, 09th February, 2026
20 MAGHA, 1947 (SAKA)
FINANCIAL ASSISTANCE TO MIZORAM
1566. SHRI RICHARD VANLALHMANGAIHA :
Will the Minister of FINANCE be pleased to state:
(a) whether the Union Government has assessed the current financial condition of the
State of Mizoram, particularly in view of its geographical constraints, limited revenue
base and increasing developmental expenditure;
(b) if so, the details thereof;
(c) whether the Union Government proposes to provide any additional financial
assistance, special grants or relaxation in fiscal norms to the State of Mizoram; and
(d) if so, the details thereof along with the time-frame for its implementation?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) & (b) Assessment of financial condition of States including own revenue, expenditure
requirement and financial needs is done by the Finance Commission every five years. The
Commission also recommends the quantum of devolution of central taxes & duties and grants
to be made to States and the inter-se share of States in the devolution. Based on the
recommendations of the Finance Commission, the Union Government has increased the tax
devolution to States from 32% in the 13th Finance Commission period to 42% in the 14th
Finance Commission period. The 15th Finance Commission also maintained same level ofdevolution after adjusting 1% for Jammu and Kashmir. Further, some States including
Mizoram were also provided Revenue Deficit Grant to bridge the gap between State’s
expenditure and revenue.
(c) & (d) All States including Mizoram have enacted their Fiscal Responsibility and Budget
Management (FRBM) Act which makes the State Government responsible to ensure prudence
in fiscal management and fiscal stability by progressive elimination of revenue deficit,
reduction in fiscal deficit, prudent debt management consistent with fiscal sustainability and
greater transparency in fiscal operations of the government. Compliance to the State FRBM
Act is monitored by the respective State Legislatures. Department of Expenditure, Ministry of
Finance, usually considers the fiscal limits as per the accepted recommendations of the Finance
Commission while exercising powers to approve borrowings by States under Article 293(3) of
the Constitution of India.
Besides the Finance Commission recommended grants & grants under the Centrally Sponsored
Schemes, the Union Government is also providing funds to States under the Schemes for
Special Assistance to States for Capital Expenditure/Investment (SASCI). An amount of Rs.
3,243.35 crore has been released to Mizoram under SASCI from 2020-21 to 2025-26 till
29.01.2026. Moreover, Additional Central Assistance (ACA) for Externally Aided Projects
(EAPs) is provided to Mizoram as 90% grant and only 10% as loan.
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