BackCentre releases 6.1K cr to 14 states as post devolution revenue deficit grant
This grant was released as recommended by the 15th Finance CommissionFinance Minister Nirmala Sitharaman mentioned the amount that was released on January 7 would provide states additional resources during the Corona crisis.
PremiumThe Finance Ministry on Thursday released ₹6,195.08 crore to 14 states as the tenth equated monthly installment of the Post Devolution Revenue Deficit Grant. This grant was released as recommended by the 15th Finance Commission.
Finance Minister Nirmala Sitharaman in a tweet mentioned that the grant released to the states on January 7 would provide them additional resources during the Corona crisis.
Also Read: Virus spread slows but two states still a worry
She wrote on Thursday, the government on January 7, 2021 released ₹6,195.08 crore to 14 states as the tenth equated monthly instalment of the Post Devolution Revenue Deficit Grant as recommended by the 15th Finance Commission. This would provide them additional resources during the Corona crisis.
As per the official statement, the grant was released to Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim, Tamil Nadu, Tripura, Uttarakhand and West Bengal.
A similar amount was released as a grant for April-November months of the current financial year.
The Finance Commission provides a mechanism for the Centre to compensate for revenue loss incurred by states, which is referred to as post-devolution revenue deficit grant.
India's fiscal deficit likely to be over 7% in FY21
On Thursday, Finance Ministry sources also told Reuters, India's fiscal deficit for year ending in March is likely to be over 7% of gross domestic product as revenue collections suffered from a lockdown and restrictions to rein in the spread of COVID-19.
India's government had projected a fiscal deficit of 3.5% of GDP for the current year last February. It estimated government borrowing of 7.8 trillion rupees, later revised to 12 trillion rupees, to provide relief to millions of people and businesses hurt by the pandemic.
A fiscal deficit of more than 7% would be higher than some private economists have projected. Many of them forecast an uptick in tax collections in the second half of the fiscal year. But government sources say the uptick won't be enough to compensate for earlier losses.
"The fiscal deficit will be bigger than what is estimated by some ... Our revenue collections suffered due to the complete lockdown in the first three months and that is hard to recover," said a source with direct knowledge of budget discussions. "What we're looking at is a 7% plus."
Two of the sources said the revenue shortfall from tax and divestment of state-run companies could be as much as 7 trillion rupees.
A finance ministry spokesman declined to comment on the matter. The government has yet to release any revised fiscal deficit estimates.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
