Finance minister Nirmala Sitharaman on Tuesday slammed states for not spending sums allotted to them.

Replying to discussions on Union Budget for 2025-26 in the Lok Sabha, Sitharaman said ₹1 lakh crore in unspent funds remained in state accounts as of December 31, 2024.

She urged states to exhaust existing allocations before seeking further assistance from the central government.

She also said there has been no cut in transfer to states and ₹25.01 lakh crore will be transferred in 2025-26.

“States must be held accountable. These amounts are lying idle in SNA (Single Nodal Agency) and escrow accounts instead of being deployed for intended projects. Before asking for more, they should first use what they have,” she said.

The finance minister said the budget has taken various steps to increase liquidity in the hands of people while maintaining fiscal prudence by using 99 per cent of the borrowing in 2025-26 to fund capital expenditure.

She said that inflation management received the highest priority of the government with retail inflation within the tolerance band of 2-6 per cent. Inflation trend, particularly in food, appears to be moderating.

The government is targeting a fiscal deficit of ₹15.68 lakh crore, which is 4.4 per cent of GDP in 2025-26.

“The government is using almost the entire borrowed resources for financing effective capital expenditure. So the borrowings are not going for revenue expenditure or committed expenditure, or any of those kinds. It’s going only for creating capital assets.

On the weakening of rupee against the dollar, the minister said various global and domestic factors are influencing the value of rupee against the US dollar. The Indian rupee has depreciated 3.3 per cent against the US dollar between October 2024 and January 2025, but the decline has been lower than that in some of its Asian peers.

China FDI

Chief economic advisor V. Anantha Nageswaran said in Mumbai that a review of the nearly five-year old restrictions on Chinese investments into India is unlikely in the near future.

Both countries have to understand the importance of mutual dependence and mutual benefits, Nageswaran said.

``I don’t think it is something you would expect to see immediate results because both sides are crossing the river by feeling the stones, so to speak,” Nageswaran said, while replying to a query on whether any changes are on the anvil. He was speaking on the sidelines of an event of the Indian Venture Capital Association.