Central grants to Gujarat have fallen sharply largely due to the phase-out of GST compensation and lower Finance Commission transfers.

CAG report, Central grants to Gujarat have fallen sharply (down 45% in FY25), largely due to the phase-out of GST compensation and lower Finance Commission transfers. In fact, total grants have nearly halved since FY21. This isn’t a state being propped up by special central munificence and it operates without central cushion.

What stands out is how Gujarat manages. Despite declining grants, it has continued to industrialise, build formidable infrastructure, and maintain relatively organised urban growth, something many developed and higher-transfer states struggle with. Thanks to fiscal discipline, tighter spending, and almost no largs-scale handouts. Gujarat runs very low level of debt and tighter finances.. Note it does not have have liquor revenue as a major fiscal crutch like lot of state So the Gujarat story isn’t of a “favoured state, but it’s of a state that has largely built its growth model despite shrinking central support, not because of it.