Centre disburses ₹1.73 lakh crore to states for tax devolution
Centre releases ₹1.73 lakh crore to states ahead of Budget 2025-26 to spur capital spending; BJP-ruled states receive largest shares
New Delhi: Ahead of the Union Budget for 2025-26, the Centre on Friday "doled out" a New Year gift to the states, releasing tax devolution of over Rs 1.73-lakh crores as against the devolution of Rs 89,086 crores in December 2024. The BJP-ruled states like Uttar Pradesh, Uttarakhand, Bihar, Madhya Pradesh, Maharashtra and Rajasthan received the highest amount among other states. The move of the government aims to spur capital spending among states.
The tax devolution also comes ahead of schedule after the Central government’s first advance estimates said the gross domestic product (GDP) is likely to grow at a four-year low of 6.4 per cent in FY25, down from 8.2 per cent in the previous financial year. Currently, 41 per cent of tax collected by the Centre is devolved in instalments among states during a fiscal year.
The government said that the money released will aid states to finance their developmental and welfare-related schemes. “A higher amount is being devolved this month to enable states to accelerate capital spending and finance their development and welfare-related expenditure,” the finance ministry said in a statement.
In terms of state-wise allocation, Uttar Pradesh, Uttarakhand and Bihar received the biggest share of funds. The BJP-ruled Uttar Pradesh received Rs 31,039.84 crores, Bihar Rs 17,403.36 crores, Madhya Pradesh Rs 13,582.86 crores, Maharashtra Rs 10,930.31 crores, Rajasthan Rs 10,426.78 crores, while West Bengal was allocated Rs 13,017.06 crores, Karnataka Rs 6,310.40 crores and Jharkhand Rs 5,722.10 crores.
According to experts and economists the economic growth of the country has been pulled down due to low fiscal stimulus and a sharp slowdown in the second quarter of FY25. In the September quarter, the GDP growth declined to two-year low of 5.4 per cent.