Tripura Loses Rs. 4,000 Crore Annually as Centre Ends Gap Grant, Govt. Exploring Alternative Sources of Revenue
By Our Correspondent
Agartala, September 25, 2026
A major debate over Centre–State financial relations has emerged in Tripura after Finance Minister Pranajit Singha Roy said the state is losing around Rs.4,000 crore every year following the discontinuation of the Revenue Deficit/Gap Grant under the recommendations of the 16th Finance Commission.
The Finance Minister’s remarks have triggered questions over the financial implications for Tripura despite the state being governed by the BJP-led “double-engine” arrangement at the Centre and in the state. However, the discontinuation of the grant is officially linked to the recommendations of the 16th Finance Commission and is not described in available records as a decision targeted specifically at Tripura.
According to Singha Roy, Tripura had been receiving roughly Rs.4,000 crore annually as gap funding, and the discontinuation of this support represents a substantial recurring financial challenge for the state.
The Finance Minister, however, has maintained that Tripura’s financial position remains stable and rejected the description of the situation as a financial crisis. He said the government is exploring alternative sources of revenue and other financial avenues to manage the reduction in central support.
The issue is particularly significant for Tripura because of its relatively limited own-revenue base and its dependence on central transfers to finance salaries, pensions, welfare programmes and development expenditure.
The financial change follows the 16th Finance Commission’s decision not to recommend Revenue Deficit Grants for the 2026–31 award period.
A Tripura High Court proceeding in April 2026 recorded the State Government’s position that Tripura was facing acute fiscal stress following the discontinuation of the Revenue Deficit Grant. The same proceeding noted that Tripura’s share in the divisible pool of central taxes had also been revised from 0.708 per cent to 0.641 per cent under the new Finance Commission formula.
The development therefore represents a significant change from the previous Finance Commission period, when Tripura had benefited from recurring revenue-deficit support.
At the same time, the Centre has introduced a new financial assistance window, ‘Pride of Hills’, under the Special Assistance to States for Capital Investment.
Tripura has been allocated Rs.3,450 crore for 2026–27 under the scheme. The allocation is part of a Rs.25,000-crore package for nine hill states.
The Finance Minister has pointed to this allocation while explaining how the state intends to manage the loss of the earlier gap funding. In September, he said that despite the Rs. 4,000-crore curtailment, the Centre had provided Rs. 3,450 crore through the new scheme and that the government was exploring different avenues to manage the situation.
However, the two forms of assistance are not necessarily equivalent: the earlier gap grant was recurring revenue support, whereas Pride of Hills is a special assistance mechanism focused on capital investment and related permitted uses.
If the reported annual gap of approximately Rs.4,000 crore continues for five years without an equivalent recurring replacement, the cumulative difference would mathematically amount to about Rs.20,000 crore.
This should not be interpreted as an official projection of Tripura’s future fiscal deficit. It is simply the cumulative value of the annual shortfall cited by the Finance Minister.
Singha Roy has said that the government is looking at multiple avenues to strengthen its own revenue base. At the same time, he has indicated that the state is not planning to impose new taxes simply to compensate for the reduction in central support.
The Finance Minister has also defended the government’s borrowing policy, arguing that long-term loans on favourable terms are being used to accelerate development activities.
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