Centre releases Rs 6,195 crore to 14 states as devolution of taxes

The Central government on Friday released Rs 6,195.08 crore to 14 states as the sixth equated monthly installment of the Post Devolution Revenue Deficit Grant (PDRDG) as recommended by the 15th Finance Commission.

Office of Union Finance Minister Nirmala Sitharaman in a tweet said that this would provide them with additional resources during the Covid-19 crisis.

"The government on September 10, 2020, released Rs 6,195.08 crore to 14 states as the sixth equated monthly installment of the Post Devolution Revenue Deficit Grant as recommended by the 15th Finance Commission. This would provide them additional resources during the Corona crisis," the ministry said. 

The Budget had projected the share of the states in taxes at Rs 7.84 trillion for 2020-21. The 15th Finance Commission had recommended the share of states at 41 per cent of the divisible pool and 1 per cent for the newly-created Union Territories of Jammu and Kashmir, and Ladakh. 

The 14th Finance Commission had earlier recommended that the states be given 42 per cent share in taxes .

The Economic Advisory Council of the 15th Finance Commission had advised the Finance Ministry to treat the financial year 2020-21 and 2021-22 differently in comparison to the next four years. The advise came in the backdrop of the Centre is facing difficulties to disburse GST compensation to states on the low revenue collection.

The commission is to give recommendations for devolution of taxes and other fiscal matters over the next five years starting April 1, 2020.

An official statement said that during an online meeting of the advisory council with the commission, the council was of the view that the Finance Commission is faced with an "unprecedented situation of uncertainties". The advisory council felt that the government debt relative to GDP is likely to increase steeply in the initial years, however, the purpose should be to endeavour to bring it down in the subsequent years.