Why Centre doubled tax devolved to states in October

New Delhi: The Centre released funds worth Rs 1.78 lakh crore to state governments, amounting to twin instalments, in a bid to spur capital expenditure (capex) at the state level. This amount is double the average devolution of Rs 89,086.5 crore. The tax devolution accounts for the upcoming festive season and also aims to offer states an impetus in terms of planning capital expenditure, according to the finance ministry.

👉 Union Government releases tax devolution of ₹1,78,173 crore to State Governments, including one advance instalment of ₹89,086.50 crore in addition to regular instalment due in October, 2024

👉Advance instalment released in view of upcoming festive season and to enable… pic.twitter.com/1wBOacu5mo

— Ministry of Finance (@FinMinIndia) October 10, 2024

Which states received how much

So far, the Centre has disbursed 2 instalments to state governments. The first advance monthly instalment was disbursed in June which amounted to over Rs 1.39 lakh crore. The following states received the highest share of the Central devolution:

States which received the lowest share of Central devolution

Why is states’ capex declining?

The primary reason behind the decline in states’ capital expenditure were the general elections, the Hindu Business Line reported, citing April-June official data. During this period, states’ capex stood 20 per cent lower than the year-ago period. Central public sector enterprises’ (CPSEs) expenditure declined by over 16 per cent in April-July 2024, according to the report.

In an analysis of 18 states, it was found that their capital expenditure moderated to Rs 1.2 lakh crore from Rs 1.46 lakh crore in the year-ago period during the April-July period, the FE reported. In a bid to spur states’ capex spending, the Centre is also planning to front load a Rs 1.5 lakh crore interest-free loan to states, according to the report.

 The central government in October devolved a significant sum of money to states in a bid to boost capital expenditure. Here’s what it means.  Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today