The central government has approved the release of ₹72,961 crores as an additional instalment of tax devolution to state governments to finance various social welfare measures and infrastructure development schemes. This move aims to strengthen the hands of state governments in financing these initiatives.
Additional Tax Devolution of ₹72,961 Cr for States
The Union Government, in addition to the tax devolution instalment due to states on January 10, 2024, and the already released ₹72,961.21 crore on December 11, 2023, has authorized the release of an extra instalment of tax devolution amounting to Rs 72,961.21 crore.
This move aims to strengthen state governments for financing various social welfare measures and infrastructure development schemes in light of the upcoming festivities and the New Year, according to the finance ministry. Additionally, there has been a precedent of the central government releasing advance devolution instalments to states, including one in June of this year, to accelerate capital spending and support development and welfare-related expenditures, providing resources for priority projects or schemes.
Centre Transfers Rs 1.46 Lakh Crore to States in December
In December, the Centre transferred Rs 1.46 lakh crore to states, marking the second double instalment of tax devolution for the year 2023-24, following the first in June. Uttar Pradesh received the largest share, with Rs 13,089 crore out of the Rs 72,961 crore transferred on December 22, followed by Bihar at Rs 7,338 crore. The distribution of funds among states is based on various factors, including population.
Transfers to States in 2023-24
According to the 2023-24 Budget, the Centre anticipates transferring Rs 10.21 lakh crore to states this year, with each of the 14 instalments pegged at Rs 72,961 crore. However, the transfers’ size may increase as the year progresses, contingent on improved Centre revenues, as seen in the first quarter of 2023-24, where monthly transfers amounted to Rs 59,140 crore.
The Union government has already transferred Rs 7.47 lakh crore in the first nine months against the budget estimate of Rs 10.21 lakh crore. This leaves Rs 2.74 lakh crore to be transferred in January-March 2024 for the budget estimate to be met, equating to Rs 91,386 crore per month. In its December 22 statement, the finance ministry announced another instalment transfer on January 10, 2024, without specifying the size of that instalment.