FinMin releases grant of Rs 6,195 Cr to states; how grants helped states narrow fiscal deficit in Q1

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September 11, 2020 6:56 PM

The central government has released Rs 6,195.08 crore to 14 states in an effort to provide additional resources amid the coronavirus crisis.

grants, centres grant to states, revenue deficit, revenue making, centre's aidThe grant has been released at a time when the states and the Centre are in a tussle around the promised GST compensation. 

The Ministry of Finance has released Rs 6,195.08 crore to 14 states in an effort to provide additional resources amid the coronavirus crisis. The fund is released in the name of the sixth equated monthly installment of the Post Devolution Revenue Deficit Grant, recommended by the 15th Finance Commission, the Office of Anurag Thakur, MoS, Ministry of Finance, said in a tweet. Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim, Tamil Nadu, Tripura, Uttarakhand, and West Bengal are the 14 states to receive the grant. The grant has been released at a time when the states and the Centre are in a tussle around the promised GST compensation. 

It is the second time after the April-August period, when such grant has been issued. It is to be noted that while the states’ total tax receipts (including center’s devolution) fell 32.1 per cent and non-tax revenue receipts fell 27 per cent on-year in the first quarter of FY21, it is the grants which has helped the states to narrow their fiscal deficits. The grants from the center grew by 56 per cent during the first quarter of the current fiscal, said the Ecoscope report by Motilal Oswal Institutional Equities.

Also Read: States’ fiscal deficit doubles in Q1: Tax, stamp duties collections in free fall; these states hit most

Meanwhile, the fiscal deficit of 14 states was 36.5 per cent of BE in Q1, which was more than double of that in the previous years. The fiscal deficit was around 70 per cent of BE in Kerala and Andhra Pradesh in the first quarter and more than 50 per cent of BE in Telangana.

While the economic activity started to rebound after the nationwide lockdown was lifted, it once again started to fall due to the rising number of coronavirus cases and regional lockdowns in various parts of the country. India reported a record increase of 96,550 new coronavirus cases on Friday, taking its tally to 45,62,414. Amid the unavailability of vaccine and the continuously surging number of cases, both the states and the Centre are struggling to maintain their books. 

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