Home / News / India /  Finance ministry releases 17,287 crore to states to fight Covid-19 outbreak

New Delhi: Finance ministry on Friday released 17,287 crore to different states on account of Centre's share of state disaster response mitigation fund (SDRMF) as well as revenue deficit grants in order to enhance financial resources of states to fight the Covid-19 outbreak.

While the first installment of SDRMF amounts to 11,092 crore, the initial disbursement of post-devolution revenue deficit grant for 14 states as recommended by the 15th Finance Commission (FFC) comes to 6,195 crore.

Under the SDRMF, Maharashtra received the highest amount of 1,611 crore, followed by Madhya Pradesh ( 910 crore) and Odisha ( 802 crore), while under the revenue deficit grants, Kerala received 1,277 crore followed by Himachal Pradesh ( 953 crore) and Punjab ( 638 crore).

Many states have been demanding the Centre to release more funds as it is the states that are fighting the escalating Covid-19 outbreak on the ground.

States like Kerala had earlier objected the finance ministry’s move to allocate only 40% of the 74,340 crore revenue deficit grants for FY21 recommended by the FFC despite accepted the recommendation. Of the 74,340 crore revenue deficit grants, the largest beneficiaries of the recommendation are Kerala ( 15,323 crore), Himachal Pradesh ( 11,431 crore), Punjab ( 7,659 crore), Assam ( 7,579 crore), Andhra Pradesh ( 5,897 crore), Uttarakhand ( 5,076 crore) and West Bengal ( 5,013 crore). The Centre later clarified that it will allocate the rest of the amount through demand for grants at a later stage.

Since the FFC used 2011 Census data, the tax share of most southern states with low population growth rates, such as Andhra Pradesh, Kerala and Karnataka, has come down, while the share of Bihar, Madhya Pradesh, Punjab, Maharashtra and Gujarat has gone up. The FFC assigned 15% weight to the population of a state, down from the 17.5% allocated by the 14th Finance Commission, while raising the weight under demographic performance from 10% to 12.5%.

The commission had also recommended special grants of 6,764 crore for 2020-21 to ensure that no state receives less than what it received in FY20 on account of tax devolution and revenue deficit grants. However, the finance ministry has asked the FFC to review its recommendations on special grants and nutrition grants to the states.

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