Finance Ministry releases Rs 47,541 crore as advance instalment of tax devolution to states

FM Nirmala Sitharaman. | PC-Moneycontrol

The Union Finance Ministry on January 20 released Rs 47,541 crore as advance instalment of tax devolution to states. With this, the total advance instalment of tax devolution to states touched Rs 95,082 crore during January 2022.

With the release of this second advance instalment, the states would have received an additional amount of Rs 90,082 crore, which was decided to be issued under tax devolution over and above the budgeted amount in FY22. The Union government had released the first advance instalment of tax devolution amounting to Rs 47,541 crore to states on November 22, 2021.

"This is in line with the commitment of Government of India to strengthen the hands of States to accelerate their capital and developmental expenditure to ameliorate the deleterious effects of COVID-19 pandemic," the Finance Ministry said in a statement.

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Earlier in November 2021, FM Nirmala Sitharaman had said the government will issue 95,082 crore to states, which will include the advance release of one instalment of central tax devolution. She had added that the release would help the states to drive up capital expenditure and aid growth.

According to the Finance Commission formula, states are entitled to 41 percent of central taxes, which is devolved in 14 instalments in a financial year.

“This being a very exceptional year, states will not be short of money in their hands when all of us are pushing forward with the infrastructure expenditure to be taken up by them," Sitharaman had said.

In the Union Budget 2021-22, the FM had announced a Rs 5.54 lakh crore capital outlay, which was an increase of 34.5 percent compared to previous year. Apart from this, the states and autonomous bodies were also allocated with an additional Rs 2 lakh crore for their capital expenditure.