The Union government on June 12 said it released Rs 1.18 lakh crore to states as tax devolution - double the "normal monthly devolution" of Rs 59,140 crore.
"One advance instalment in addition to the regular instalment due in June 2023 is being released to states to enable them to speed up capital spending, finance their development/ welfare related expenditure and also to make available resources for priority projects/ schemes," the finance ministry said in a statement on June 12.
This is the third instalment of tax devolution to states for the current financial year.
The Centre releases tax devolution to states in 14 equal instalments every year. As such, this involves two months where the instalment is double the usual monthly amount. However, these double-instalment months normally come at the end of the financial year after the Centre has greater clarity on its finances.
But with New Delhi's finances in a good position, the last couple of years have seen these additional instalments being brought forward.
As per the 2023-24 Budget, the Centre expects to transfer Rs 10.21 lakh crore to states this year. So, each of the 14 instalments should be Rs 72,961 crore. However, the size of the instalments increases as the year progresses once the Centre's revenues improve.
For instance, in 2022-23, the first three instalments were of under Rs 50,000 crore each, before rising to Rs 58,333. In addition, data from the Controller General of Accounts shows the Centre made four payments of more than Rs 1 lakh crore to states in 2022-23 — in August, November, February, and March.
So far in 2023-24, the Centre has transferred Rs 2.37 lakh crore to states. This amounts to 23.1 percent of the full-year estimate — though if the last two years are anything to go by, the budget estimate may be exceeded by a handy margin. In 2021-22, for instance, the Centre transferred Rs 8.98 lakh crore to states, exceeding the revised estimate of Rs 7.45 lakh.
In 2022-23, the Centre transferred Rs 9.48 lakh crore as against the budget estimate of Rs 8.17 lakh crore.
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