A fair share? Centre’s transfers to states decline below half of its budgeted expenditure

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Published: February 11, 2019 1:45:25 PM

Total transfers to states and union territories have registered an increase of 10% y-o-y in 2019-20 but as a percentage of the Union government's total budgeted expenditure it has come down to below 50% first time in three years.

In last two years, the total transfers to states and UTs were pegged at above 50% before declining in FY20.

For the first time in three years, the total transfers to states and union territories from the Union government will decline to an amount less than 50% its total budgeted expenditure in 2019-20. It’s a reversal of the trend witnessed in two previous years (FY18 and FY19), when the amount of total transfers to states and UTs was bigger than half of the Union government’s budgeted expenditure.

In FY 2019-20, the Centre’s total transfers to states have been pegged at Rs 13.70 lakh crore which is equal to 49.2% of its total budget of Rs 27.84 lakh crore. However, in the last two fiscals, this amount was above 50% of the Centre’s total budgeted expenditure. It was nearly 51% in both FY 2017-18 and FY 2018-19.

According to the latest data given in the interim budget presented by finance minister Piyush Goyal early this month, the amount of total transfers to states and union territories was Rs 10.85 lakh crore or equal to 50.67% of its total budgeted expenditure of Rs 19.75 lakh crore in FY 2017-18.

As per the revised estimates for FY 2018-19, the Centre’s total transfers to states and UTs have been estimated at 12.46 lakh crore or an amount equal to 50.71% of its total budgeted expenditure.

In fact, it has registered a slight increase in terms of percentage as it went up from from 50.67 in 2017-18 to 50.71% in 2018-19 as per the revised estimates before declining to an amount equal to 49.2% of the total budgeted expenditure of the Union government in FY2019-20.

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