Union Finance Minister Nirmala Sitharaman announced that states will be receiving double the share of devolution in February to ensure liquidity and aid expenditure.
The Ministry of Finance usually distributes the devolution amount or the share of central taxes to states on the 10th of every month, Sitharaman said during a discussion in Parliament on the Finance Bill.
Two months’ devolution in the place of one month’s share will be advanced to the states for February, she told the Parliament.
With tax collections expected to increase in the current fiscal, the states’ share of devolution will also be raised while maintaining the 41% formula, the minister said.
According to recommendations of the 15th Finance Commission, the share of states in the central taxes for the period between 2021 and 2026 is at 41%.
In its revised estimates for the current fiscal, the Union government increased the expected transfer to states, in the form of devolution, from Rs 8.17 lakh crore to Rs 9.48 lakh crore.
Fiscal Consolidation Not At the Cost Of Subsidies
The finance minister said the 2023 budget “astutely balances the requirement of India’s developmental imperatives within the limits of fiscal prudence”.
The budget addresses concerns of middle class, employment, MSME, agriculture, rural population, health and green growth, the minister told the Lok Sabha.
According to her, the government had ensured that fiscal prudence is maintained according to the glide path given two years ago, and it was not at the cost of cutting down fertiliser or food subsidies.
The budgetary projection for food subsidy for the next fiscal is at Rs 1.97 lakh crore and the fertiliser subsidy is at Rs 1.75 lakh crore.
“We were in a stretched fiscal situation post-pandemic,” she said.
“However, the growth in 2023-24 will be good, with policies such as PM Gati Shakti, National Logistics Policy and the PLI scheme; and with cooperative federalism, which is of great concern for us.”
Sitharaman appealed to states to be partners in the massive capital expenditure exercise.
In the budget, Rs 1.3 lakh crore has been allocated as 50-year interest-free loans to states.