FM released Rs 45,000 cr to states as addition devolution in FY21


The finance ministry released Rs 45,000 crore as additional devolution to states in FY 2020-21, an increase of 8.2% over RE 2020-21. As per RE 2020-21, Rs 5,49,959 crore, 41% of the shareable pool of taxes and duties were estimated to be released to the states. However, the ministry has devolved an amount of Rs 5,94,996 crore, based on the initial estimates of the shareable pool that would be collected in 2020-21.

“The finance ministry released these amounts to share the revenue buoyancy seen in Q4 2020-21 and in the true spirit of fiscal federalism,” the ministry said in a statement.

The additional amount of Rs 45,000 crore was released in two installments of Rs 14,500 crore and Rs 30,500 crore. Rs 14,500 crore was released along with the 14th regular instalment of devolution on March 26, 2021, whereas the second instalment of Rs 30,500 crore was released to the States on March 31, 2021, it added.

 The 15th Finance Commission has recommended that states be given 41 per cent of the divisible tax pool of the Centre during the 2020-21 fiscal.

Separately, the Department of Expenditure under the Finance Ministry has released Rs 11,830 crore to states under the ‘Special Assistance to States for Capital Expenditure’ scheme.

The scheme was announced by the Finance Minister on October 12, 2020, as part of the Aatmanirbhar Bharat package. The scheme is aimed at boosting capital expenditure by the state governments who were facing a difficult financial environment in the year 2020-21 due to a shortfall in tax revenue arising from the COVID-19 pandemic.