Centre releases Rs 6,195 Cr to 14 states; compensates for additional loss due to coronavirus pandemic

The government said that the funds have been released based on the 15th Finance Commission interim recommendations.

The Modi government has released Rs 6,195.08 crore to 14 states on account of the eighth equated monthly installment of Post Devolution Revenue Deficit Grant. Finance Minister Nirmala Sitharaman’s Office said that the funds have been released based on the 15th Finance Commission interim recommendations. While about a third of the total revenue collected by the Centre is directly transferred to states as their share in the divisible pool, the Finance Commission also provides a mechanism for compensation of any loss incurred by states, which is called post-devolution revenue deficit grants. This Finance Commission Grant forms the second largest chunk of Finance Commission transfers after the assistance to local rural bodies.

The 14 states to which the grant has been given include Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim, Tamil Nadu, Tripura, Uttarakhand, and West Bengal. It is to be noted that a similar amount was released as grant in April-October period of the current financial year.

While the Centre and states, both are struggling with revenue deficit incurred due to the disruptions caused by the coronavirus pandemic, there has been a continued discussion on the Centre’s assistance to states. The shortfall of GST compensation cess was among the issues that took the limelight in recent months. The finance ministry recently released Rs 6,000 crore as the second tranche to 16 States and 3 Union Territories under the special window to states for meeting the GST compensation cess shortfall.

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Meanwhile, the 15th Finance Commission, chaired by N K Singh, on Monday submitted its report for 2021-22 to 2025-26 to President Ram Nath Kovind. The report titled ‘Finance Commission in Covid Times’ was submitted by N K Singh along with members of the Commission Ajay Narayan Jha, Anoop Singh, Ashok Lahiri and Ramesh Chand.

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