Centre to frontload states’ share to boost capital expenditure spending

Tribune News Service

New Delhi, November 16

The Centre will transfer Rs 95,082 crore to states by November 22, of which Rs 47,549 crore is their due as part of tax devolution and a matching amount of Rs 47,549 crore is also their due but is being frontloaded to increase their capital expenditure.

“The way in which we have frontloaded many of the dues of the states has been recognised. Some of the CMs requested for increasing the states’ capital expenditure. They said it would be helpful for them to get a part of the tax devolution. I have directed the Finance Secretary to do this immediately,” Union Finance Minister Nirmala Sitharaman said on Monday night after a marathon virtual interaction with CMs and finance ministers of states.

“Other than the amount due in November of devolution, one more instalment will be given together. This will help the states in spending the amount further on infrastructure,” she explained.

Instead of transferring the entitled amount of Rs 47,541 crore, the Centre will release another Rs. 47,541 crore. The Centre transmits 41 per cent of revenues to states in 14 instalments in a financial year.

“The context of the meeting was that after the second wave, we are seeing robust growth. However, it’s also a time where we are looking at ways in which we need to sustain the growth, take it as close as possible to a double-digit growth for which the Centre and states have to work together,” said the Union Finance Minister.

“In most of the issues related to investment, development and manufacturing activities, it is the states who are doing work at the forefront. The support from the Centre is always there. But we also wanted to make sure that the states’ understanding and the issues they wanted to discuss must be heard and that’s the reason this meeting was called.

“Unless states and the Centre put up money for building, the ripple effects for speedier and better growth would not be as desirable as we wish to have it and, therefore, that expenditure is absolutely necessary,” she said.