Centre doubles tax devolution to states at Rs 1.73 lakh crore to boost capital expenditure

In terms of state-wise allocation, Uttar Pradesh, Uttarakhand and Bihar received the biggest share of funds from the Centre

To spur capital spending among states, the Centre released Rs 1.73 lakh crore to states as part of its tax revenue devolution, which is almost double the funds released in December.

“A higher amount is being devolved this month to enable states to accelerate capital spending and finance their development and welfare-related expenditures,” the government said in a statement on January 10. The announcement comes a few weeks after the Centre released Rs 89,086 crore in December.

The tax devolution also comes ahead of schedule after the government’s first advanced estimates said the GDP is likely to grow at a four-year low of 6.4 percent in FY25, down from 8.2 percent in the previous financial year. The growth has been pulled down due to low fiscal stimulus and a sharp slowdown in the second quarter of FY25, experts said. In the September quarter, GDP declined to two-year low of 5.4 percent.

In terms of state-wise allocation, Uttar Pradesh, Uttarakhand and Bihar received the biggest share of funds. The BJP-ruled Uttar Pradesh received Rs 31,039.84 crore, Bihar Rs 17,403.36 crore and Madhya Pradesh Rs 13,582.86 crore.

West Bengal was allocated Rs 13,017.06 crore, Karnataka Rs 6,310.40 crore, Maharashtra Rs 10,930.31 crore and Jharkhand Rs 5,722.10 crore.