Lagatar24 Desk
New Delhi, Jan 20: Union finance minister Nirmala Sitharaman on Thursday has authorised release of advance installment of tax devolution to State Governments amounting to Rs. 47,541 cr. This in addition to the regular devolution for the month of Jan 2022.
“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,” a finance ministry statement said.
Finance Minister has authorised release of advance installment of tax devolution to State Governments amounting to Rs. 47,541 cr. This in addition to the regular devolution for the month of Jan 2022. States receive a total of Rs. 95,082 cr during this month: Ministry of Finance
— ANI (@ANI) January 20, 2022
Now, states would receive a total of Rs 95,082 crore or double their respective entitlement during the month of January 2022, said the ministry.
On November 22, 2021, the Central government released the first advance instalment of tax devolution to states amounting to Rs47,541 crore.
“With the release of the second advance instalment today, the States would have received an additional amount of Rs. 90,082 crore under tax devolution over and above what has been budgeted to be released till January 2022,” it added.
Aside from advance tax devolution, the Centre completed the delivery of a back-to-back loan worth 1.59 lakh crore to states in October 2021 in lieu of GST compensation shortfalls in FY 2021-22.
Notably, the Union finance ministry released ?44,000 crore back-to-back loans to states, on October 28, 2021 which was the final instalment of ?1.59 lakh crore estimated GST revenue shortfall for 2021-22 that aimed to frontload public expenditure and boost growth.
Earlier this year, two instalments were rereleased: 40,000 crore on October 7 and 75,000 crore on July 15.
The Union government established a back-to-back borrowing method in 2020 to make up for states’ revenue losses after GST receipts fell drastically due to the devastating impact of the Covid-19 outbreak, which triggered a 68-day statewide lockdown from March 25 last year.
The borrowing mechanism, which was proposed by the Centre and subsequently approved by all states last year, is made possible via a Reserve Bank of India special window.
