Centre releases Rs 4 lakh cr to states; rest by March end

As much as Rs 4.12 lakh crore has been released to states by way of tax devolution so far this fiscal and more funds will be given in three installments till March-end, government said today.
The Centre accepted the recommendations of the 14th Finance Commission (FFC) under which there was "a phenomenal increase in the tax devolution to the states due to increase of share in the divisible pool of taxes from 32 per cent to 42 per cent," Finance Secretary Ratan P Watal said in a statement.
As per its commitment in the Union Budget for 2015-16, the Ministry of Finance made a provision of Rs 5.24 lakh crore under devolution of taxes to states as compared to the allocation of Rs 3.38 lakh crore in 2014-15 (RE).

"So far, Rs 4.12 crore (78.56 per cent) has been released to the States by way of tax devolution and as per convention, three more installments will be released in March 2015 based on the tax collections till then," he said.
Apart from the devolution of the taxes to the States, FFC recommended other grants namely revenue deficit grants, local body grants and grants under State's Disaster Response Fund (SDRF).
Against allocation of Rs 48,906 crore for 11 revenue deficit States during 2015-16, Rs 44,829.62 crore (91.66 per cent) has been released so far in eleven installments.

"Similarly, local bodies grants are estimated to be at Rs 29,987 crore in the year 2015-16 as against Rs 22,399 crore released in 2014-15," he said.

"In the current year 2015-16, Rs 21,227.50 crore (70.78 per cent) has been released to States for the duly constituted local bodies till date. Under SDRF, an allocation of Rs 8,512.50 crore has been made during 2015-16 and Rs 8,320.09 crore (97.73 per cent) has been released to the states," he added.
Apart from the release under SDRF, he said, to meet the requirements of increase in expenditure for relief due to natural calamities in the current year, the Central Government has released Rs 8,672.47 crore under NDRF against a Budget Estimate of Rs 5,690 crore.
The additional expenditure was met by obtaining supplementary grants, he added.

Watal further said, states are also receiving Central share towards state plan or Centrally Sponsored Schemes(CSS) under different sectors and programmes.
In the Budget Estimates of 2015-16, Watal said, the total
transfers to states is estimated to be at Rs 8.36 lakh crore as against Rs 6.77 lakh crore during 2014-15 (RE) and Rs 6.36 lakh crore during 2013-14.
"The composition of statutory transfers has increased to over 73 per cent of the total transfers. In the true spirit of cooperative federalism, the discretionary transfers from the Central Government has gone down from 38 per cent in 2013-14 to 24 per cent in 2015-16," he said.

There is thus greater predictability and certainty now in the quantum of funds flowing to states apart from the overall increase in untied funds, he added.
"It may be mentioned that FFC recommendation of higher devolution has increased tax devolution from Rs 14.48 lakh crore in 13th Finance Commission period to Rs 39.48 lakh crore in FFC period leading to huge increase of about Rs 25 lakh crore (i.E.173 per cent)," he said.
He added that the FFC has also recommended grant-in-aid totalling Rs 5.4 lakh crore during entire period of 2015-2020 to cover Revenue Deficit of 11 States, Local body grants (both to rural and urban local bodies) and Grants for State's Disaster Response Fund (SDRF) as against Rs 2.69 lakh crore recommended by 13th Finance Commission.

"Particularly for local bodies, the FFC has recommended total grant of Rs 2,87,436 crore for duly constituted Gram Panchayats (GPs) and municipalities which is a quantum jump from Rs.87,519 crore during 13th Finance Commission award period," he said.
There is increase of about 228 per cent in the entire FFC period, he added.