Centre transfers Rs 95,082 crore to states as tax share

By: |
November 24, 2021 4:05 AM

The higher devolution was promised by Union finance minister Nirmala Sitharaman on November 15.

taxAccording to the state-wise breakup of amounts released on Tuesday, Uttar Pradesh will be the highest recipient with Rs 17,057 crore

Thanks to robust tax receipts, the Union government on Tuesday released to Rs 95,082 crore to states as November as their share of divisible tax pool, twice the monthly devolution corresponding to the Budget Estimate. The higher devolution was promised by Union finance minister Nirmala Sitharaman on November 15 after the virtual meeting with chief ministers, state finance ministers to step up states’ capital investments in infrastructure and other areas.

According to the state-wise breakup of amounts released on Tuesday, Uttar Pradesh will be the highest recipient with Rs 17,057 crore, followed by Bihar (Rs 9,563 crore), Madhya Pradesh (Rs 7,464 crore), West Bengal (Rs 7,153 crore) and Maharashtra (Rs 6,006 crore). Typically, the tax devolution to states is done in 14 instalments in a year and the adjustments as per the revised estimate are usually done in March. To improve the liquidity of states, the Centre has already released the entire back-to-back loan component of Rs 1.59 lakh crore to the states in lieu of shortfall in release of GST compensation during the current fiscal. This was in addition to the compensation released to the states from the designated cess kitty of Rs 60,000 crore.

Data gathered by FE of 20 states showed that these states reported a combined capex of Rs 1.6 lakh crore in April-September of FY22, up 79% on year, compared with a decline of 31% on year in the corresponding period of FY21.
The Centre has asked states to undertake Rs 1.1-lakh-crore more capex in FY22 than Rs 5 lakh crore achieved in pre-Covid year of FY20. The states are allowed net borrowing of 4% of GSDP in FY22 with 50 basis point of this linked to achievement of incremental capex over their investment in FY20.

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