Centre releases Rs 1.09 lakh crore additional tax devolution to states ahead of August payout

The Centre has released an additional Rs 1,09,019 crore as tax devolution to states ahead of the scheduled August payout to strengthen state finances, accelerate capital expenditure and support development, while India's fiscal deficit stood at Rs 3.1 lakh crore in the first quarter

New Delhi: The government on Saturday said it has released additional instalment of tax devolution worth Rs 1,09,019 crore to state governments, which is in addition to the normal monthly devolution to be released on August 10.

The release on August 1 is in line with the commitment of Government of India to strengthen the finances of states to accelerate their capital and developmental expenditure, according to an official statement.

---

Uttar Pradesh, the nation’s most populous state, got the highest — Rs 19,208 crore, followed by Bihar (Rs 10,845 crore), Madhya Pradesh (Rs 8,010 crore), West Bengal (Rs 7,866 crore), Maharashtra (Rs 7,022 crore), and Rajasthan (Rs 6,460 crore).

Andhra Pradesh (Rs 4,597 crore), Odisha (Rs 4,819 crore), Tamil Nadu (Rs 4,466 crore), Karnataka (Rs 4,504 crore), and Jharkhand (Rs 3,660 crore) also received significant additional tax devolution.

In October last year, the Union government released an additional tax devolution of Rs 1,01,603 crore to state governments. This was an additional amount to the normal monthly devolution, which was released on October 10.

According to the ministry, the decision was taken in view festive season to enable states to accelerate capital spending and finance their development and welfare-related expenditure.

Meanwhile, India’s fiscal deficit was estimated at Rs 3.1 lakh crore during the first quarter (April-June) of the current financial year, which works out to 18.2 per cent of the full-year budget estimate, according to data released by the Controller General of Accounts (CGA).

The fiscal gap was higher than the Rs 2.8 lakh crore recorded during the April-June period of the previous financial year, showing increased government spending even as revenue collections remained robust. For FY27, the Centre has budgeted a fiscal deficit of Rs 16.96 lakh crore, equivalent to 4.3 per cent of the country’s gross domestic product (GDP), along a declining gliding path as part of the fiscal consolidation process.

Net tax receipts during the April-June quarter recorded a robust increase to Rs 6.4 lakh crore from Rs 5.4 lakh crore in the corresponding period last year, indicating sustained growth in direct and indirect tax inflows despite global economic uncertainties.