The central government transferred a total of Rs 8.83 lakh crore to state governments in FY22, exceeding the revised estimate by Rs 1.38 lakh crore, or 18.6 percent.
The 2022 Budget had already raised the devolution of states share in taxes to Rs 7.45 lakh crore from Rs 6.66 lakh crore for the current financial year.
The finance ministry said in a series of tweets on March 31 that the "unprecedented" transfer of greater funds to states was a show of "substantial support" from the Centre to ensure state governments have "all the financial resources required to fund their development programmes".
The total amount includes the release of a net Rs 43,168 crore to state governments to settle dues that were payable from 1996-97 to 2017-18, the finance ministry added.
The funds were likely transferred to states in February, with data on the central government's finances released earlier today by the Controller General of Accounts showing the Centre transferred Rs 2.42 lakh crore to states last month.
The Centre had transferred Rs 95,082 crore to states in January and Rs 35,281 crore in February 2021.
According to Aditi Nayar, chief economist at ICRA, the Rs 2.42 lakh crore released to states in February is "by far the largest monthly release".The finance ministry said in its tweets that it was able to release the extra funds following "close monitoring" of receipts from taxes and duties.
As per the latest government finances data, the Centre's gross tax revenues in April 2021-February 2022 were Rs 22.75 lakh crore, up 36.7 percent from the corresponding period for FY21. Speaking in Lok Sabha on March 25, Finance Minister Nirmala Sitharaman had said the government had collected Rs 7.3 lakh crore as corporate tax until March 24. This is 15 percent higher than the revised estimate of Rs 6.35 lakh crore for FY22. In fact, it is also higher than the target of Rs 7.2 lakh crore set for FY23.
"We expect the Government of India's gross tax revenues to exceed the FY22 RE (revised estimate) by at least Rs 1.0 lakh crore, which would be on account of non-excise revenues and therefore, 42 percent of the same would be shareable with the states. The additional estimated devolution above the RE also works out to a similar Rs 0.42 lakh crore, which leads us to wonder whether any additional tax devolution was released to the states in March," ICRA's Aditi Nayar noted.
Data on the government's finances for March and FY22 will be released at the end of May.
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