KUALA LUMPUR, Sept 9 — The Federal government’s RM547.6 million allocation in capitation grants in 2026 reflects its current financial capacity, said the Finance Ministry (MOF).
This represents an increase of 25 per cent, or RM109.2 million, compared to the existing allocation rate.
Capitation grants will be provided to state governments to enhance essential services like schools and hospitals. These grants will be determined based on the population size of each state.
“The Madani government raised the grant after considering feedback from state governments for a review, as the rate had not been revised for 23 years, with the last review conducted in 2002.
“The revision of this grant rate aims to assist state governments in managing rising administrative costs in delivering services to every resident,” it said in a written reply to the Dewan Negara, published on Parliament’s website today.
The MOF was responding to Senator Abdul Nasir Idris, who inquired about the reasons for the 25 per cent increase in the capitation grant to RM548 million in 2025. He also asked what measures would be taken to ensure the fair distribution of these grants among the states.
“The capitation grant is provided in accordance with Article 109(1)(a) of the federal constitution, to assist state governments in managing operating expenditures.
“The increase in these grants was implemented progressively, namely 42 per cent for the first 100,000 residents, 37 per cent for the next 500,000 residents, 25 per cent for the subsequent 500,000, and 15 per cent for the remaining population,” it added.
The MOF noted that a progressive approach ensures a higher percentage increase in grants for states with smaller populations, like Perlis and Melaka, compared to states with larger populations, like Selangor and Johor, which have stronger financial resources.
