Centre releases Rs 4 lakh cr to states under tax devolution

As much as Rs 4.12 lakh crore has been released to states by way of tax devolution so far this fiscal and more funds will be given in three installments till March-end, the government said on Saturday.

The Centre accepted the recommendations of the 14th Finance Commission (FFC) under which there was “a phenomenal increase in the tax devolution to the states due to increase of share in the divisible pool of taxes from 32 per cent to 42 per cent,” Finance Secretary Ratan P Watal said in a statement.

As per its commitment in the Union Budget for 2015-16, the Ministry of Finance made a provision of Rs 5.24 lakh crore under devolution of taxes to states as compared to the allocation of Rs 3.38 lakh crore in 2014-15 (RE).

“So far, Rs 4.12 crore (78.56 per cent) has been released to the States by way of tax devolution and as per convention, three more installments will be released in March 2015 based on the tax collections till then,” he said. Apart from the devolution of the taxes to the States, FFC recommended other grants namely revenue deficit grants, local body grants and grants under State’s Disaster Response Fund (SDRF).

Against allocation of Rs 48,906 crore for 11 revenue deficit States during 2015-16, Rs 44,829.62 crore (91.66 per cent) has been released so far in eleven installments.

“Similarly, local bodies grants are estimated to be at Rs 29,987 crore in the year 2015-16 as against Rs 22,399 crore released in 2014-15,” he said.

“In the current year 2015-16, Rs 21,227.50 crore (70.78 per cent) has been released to States for the duly constituted local bodies till date. Under SDRF, an allocation of Rs 8,512.50 crore has been made during 2015-16 and Rs 8,320.09 crore (97.73 per cent) has been released to the states,” he added.

Apart from the release under SDRF, he said, to meet the requirements of increase in expenditure for relief due to natural calamities in the current year, the Central Government has released Rs 8,672.47 crore under NDRF against a Budget Estimate of Rs 5,690 crore.

The additional expenditure was met by obtaining supplementary grants, he added.
Watal further said, states are also receiving Central share towards state plan or Centrally Sponsored Schemes(CSS) under different sectors and programmes.

Cash flow

The spurt in fund flow is due to acceptance of the 14th Finance Commission recommendation

FinMin made a provision of Rs 5.24 lakh crore under devolution of taxes to states

Local bodies grants are estimated to be at Rs 29,987 cr

In 2015-16, Rs 21,227.50 crore has been released to States