Centre to give states Rs 95,000 crore to help boost expenditure

The Centre on Monday decided to give over Rs 95,000 crore to states this month as part of their tax devolution amount to help them kick-start reforms and expedite capital expenditure to help the country achieve sustained double-digit economic growth after the Covid pandemic.

This is double the monthly amount of tax devolution to states. This was done on the request of certain states which wanted that part of tax devolution amount to be advanced to help them push their capital expenditure.

"I have suggested to the finance secretary that on November 22, instead of the normal monthly instalment of tax devolution amount of Rs 47,541 crore, another Rs 47,541 crore can be released. A total of Rs 95,082 crore will be given to states," Finance Minister Nirmala Sitharaman said, emerging out of a meeting with state chief ministers and finance ministers.

"This is being done in consideration of the desire for states to have money in their hands, to help infrastructure creation expenditure," Sitharaman said.

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She said the meeting with the federal bodies was to seek their ideas of pushing growth forward since in many of the issues such as manufacturing, development and investment, it is the states which have to come to the forefront.

Tax devolution to states is done in 14 instalments in a year. About 20 states have spent nearly 80% higher capital expenditure during the first nine months of the financial year 2021-22.

Sitharaman said that to help states continue with their developmental expenditures, the GST compensation agreed upon for this entire year has already been given by early November.

She said the Centre has made advance payment of many of the states' dues, which has been well-received by them.

"The 50-year interest-free capital expenditure money given to states, almost like a grant, has been well-received. Many states say they want the scheme to be continued,” she said.

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