KUALA LUMPUR: The Ministry of Finance confirmed a 25% increase in capitation grants to RM547.6 million for 2026, reflecting the federal government’s current financial capacity.
This allocation represents an additional RM109.2 million compared to the existing rate, which had remained unchanged for 23 years since its last review in 2002.
Capitation grants will be distributed to state governments to enhance essential services including schools and hospitals across all states.
The MADANI government implemented this increase after considering feedback from state governments requesting a review of the long-standing allocation rate.
This revision aims to assist state governments in managing rising administrative costs associated with delivering services to residents.
The ministry provided this explanation in a written reply to Senator Abdul Nasir Idris published on Parliament’s official website.
The capitation grant is provided under Article 109(1)(a) of the federal constitution to help state governments manage their operating expenditures.
The increased grants will be distributed using a progressive system based on population size across different tiers.
States receive a 42% increase for the first 100,000 residents, followed by 37% for the next 500,000 residents.
The allocation provides 25% for the subsequent 500,000 residents and 15% for the remaining population in each state.
This progressive approach ensures higher percentage increases for states with smaller populations like Perlis and Melaka.
Larger states such as Selangor and Johor receive relatively smaller percentage increases due to their stronger financial resources.
The system aims to ensure fair distribution while addressing the varying needs and capacities of different states. – Bernama
