Grants-in-Aid
Receipts Intermediateसहायता अनुदान
Definition
Grants-in-aid are financial transfers from the Central government to state governments or from the government to institutions where no repayment is expected. Under Article 275 of the Constitution, the Centre can make grants to states for promoting welfare of scheduled tribes or for raising administration. Finance Commission grants and centrally sponsored scheme transfers are major components.
How Grants-in-Aid Appears in India's Budget
Grants-in-aid and contributions form a significant part of Central transfers to states, separate from states' share of taxes.
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Why Grants-in-Aid Matters
Understanding grants-in-aid is essential for anyone following government finances, preparing for competitive exams, or analysing India's economic policy. This concept directly affects how the government allocates resources and plans its fiscal strategy.
In the context of India's Union Budget 2026-27, with a total size of Rs 53.47 lakh crore, terms like grants-in-aid help citizens and analysts evaluate whether the government is on the right fiscal path. The numbers in the budget are only meaningful when one understands the underlying concepts.
For UPSC aspirants, grants-in-aid is frequently tested in both Prelims and Mains, particularly in Paper III (Economic Development). For CA and MBA students, this concept appears in public finance and macroeconomics courses.
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