The Centre has released Rs 6,195 crore to 14 states as monthly instalment of post devolution revenue deficit grant. “Based on the 15th Finance Commission interim recommendations, the Govt has released Rs 6,195.08 crore to 14 states on account of the eighth equated monthly installment of Post Devolution Revenue Deficit Grant,” Office of Finance Minister Nirmala Sitharaman tweeted on Tuesday.
The 14 states are Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim, Tamil Nadu, Tripura, Uttarakhand and West Bengal. The highest amount was released to Kerala at Rs 1,277 crore, followed by Rs 952 crore to Himachal Pradesh and Rs 638 crore to Punjab.
In a bid to bridge the goods and services tax (GST) revenue shortfall, the central government last month also borrowed and transferred Rs 6,000 crore as the first tranche to 16 states and union territories under a special borrowing window. As per the finance ministry, the borrowing is fixed at an interest rate of 5.19 per cent. The tenor of borrowing is expected to be broadly in the range of 3 to 5 years.
The 15th 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.
The government intends to make weekly releases of Rs 6,000 crore to the states, the ministry had earlier said. The coronavirus pandemic has led to an acute shortage of funds for the Centre as well as states. The issue of GST compensation reached a boiling point last month when the Centre decided to compensate as many as 21 states and two union territories, which opted for this special window involving back-to-back borrowing coordinated by the ministry.
(With PTI inputs)