Union govt to give states Rs 47,051 crore as advance installment from tax devolution

This advance installment is to help states push their capital expenditure, any any adjustments will be made in March.
Nirmala Sitharaman
Nirmala Sitharaman
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The Union government will release Rs 95,082 crore as tax devolution to the states this month after including one advance instalment to help them push their capital expenditure, Finance Minister Nirmala Sitharaman said on Monday, November 15. After a meeting with all chief ministers and state finance ministers, Sitharaman said states had said that it would be helpful for them if the tax devolution is front loaded.

"I have suggested the Finance Secretary that on November 22 instead of normal Rs 47,541 crore, the states be given one more instalment. So Rs 95,082 crore will be given to states on November 22," Sitharaman told reporters here. So, with this, states will have more money in their hands so that they can consider spending it for infrastructure creation, she added. Currently, 41% of tax collected is devolved in 14 instalments and states have a predictability of their cash flows, Finance Secretary T V Somanathan said.

This is an advance release, and any adjustments will be made in March, he added. "The context of the meeting was after second Covid wave we are seeing a robust growth. However it's also the time we are looking at ways to sustain growth and take it to double digits," Sitharaman said.

This meeting was essentially to seek ideas from states because in most of the issues related to investment development, and also for manufacturing and business activities, come in states domain, she added. She further said that the recently launched National Monetisation Pipeline includes only central government assets and state assets have been out of its purview as of now.

Sitharaman suggested that there is a significant potentially monetisable asset base in states which could be leveraged to enhance the capital available for new infrastructure creation and other social sector pressing priorities, an official statement issued after the meeting said.

"Sitharaman urged states to help India become the fastest growing economy in coming years, through facilitating investment attractiveness and expediting ease of doing business measures and undertake power reforms," she said.

The minister also emphasized that since in many cases land is one of the major bottlenecks for project on-grounding, states must contrive to smoothen land acquisition procedures and create land banks to be tapped at the time of investment.

The meeting was attended by Chief Ministers of Assam, Chhattisgarh, Goa, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Tripura, and Uttar Pradesh. Lt Governors of Jammu and Kashmir; Deputy Chief Ministers of Arunachal Pradesh, Bihar, and Delhi. State ministers from Andhra Pradesh, Gujarat, Kerala, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttarakhand, and West Bengal attended Monday's meet.

During the meeting, states also gave certain recommendations to facilitate investment. These include Transparent Mechanism for Investment Facilitation that involves sharing with states, leads of prospective investors who are in touch with the Union government.

States also called for a clear-cut policy and SOPs on environment and forest clearances by Government of India, on the lines of 'Eco-Economics' and more powers to States under Forest/Environmental matters.

They also emphasised on the Need for strengthening of the dispute resolution mechanism, post-award contract enforcement and of model concession agreements to strengthen infrastructure PPP ecosystem.

Some states also suggested brining in policy for offshore wind energy, besides continuation of Union government's Scheme of loan for capital expenditure beyond the current financial year.

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