The Centre has disbursed an additional tax devolution installment of Rs 72,961.21 crore to 28 states in December, citing upcoming festivities and the New Year. This marks the second extra installment, following one in June, aimed at facilitating funding for states. In addition to the regular monthly devolution installment of Rs 72,961.21 released on December 11, another tax devolution installment is scheduled for January 10, 2024.
This December allocation brings the total transferred by the Centre to states to Rs 1.46 lakh crore. Traditionally, tax devolution occurs through 14 installments annually, with two extra installments in the final two months.
Starting from the fiscal year 2022-23, the Centre has frontloaded the two extra installments in the initial nine months to bolster states’ funds, particularly for capital expenditure. The Finance Ministry stated, “In view of the forthcoming festivities and the New Year, the Union Government has authorized the release of an additional installment of tax devolution amounting to Rs 72,961.21 crore to strengthen the hands of State Governments for financing various social welfare measures and infrastructure development schemes.”
Among the 28 states, Uttar Pradesh received the highest share with a tax devolution installment of Rs 13,088 crore, followed by Bihar at Rs 7,338 crore and West Bengal at Rs 5,488 crore. Officials clarified that the monthly devolution aligns with the budget estimate, subject to revision in the upcoming budget presentation. The total tax devolution by December reached Rs 7.47 lakh crore, constituting 73% of the FY24 budget estimate of Rs 10.21 lakh crore, compared to 63% in the previous year. Approximately Rs 2.74 lakh crore remains to be transferred to states in the last three months of this fiscal year.
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