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The Union Government has released a tax devolution of Rs 1,78,173 Crore to the state government that includes an advance installment for Rs 89,086.50 Crore, said the Ministry of Finance on Thursday.
The extra installment has been given to the state governments for enhanced capital spending and to finance their development and welfare related expenditure.
The devolution includes significant allocations to key states. Uttar Pradesh, with the largest population and numerous ongoing development projects, received Rs 31,962 crore, the highest amount disbursed to any state. Bihar followed with Rs 17,921 crore, while Madhya Pradesh was allocated Rs 13,987 crore. Other prominent beneficiaries include West Bengal (Rs 13,404 crore), Maharashtra (Rs 11,255 crore), and Rajasthan (Rs 10,737 crore).
Smaller states such as Goa and Sikkim received Rs 688 crore and Rs 691 crore, respectively, as per their proportionate share of national taxes.
Indian festivals such as Diwali and Durga Puja, typically witnesses increased economic activity. Higher consumer demand during these months leads to a surge in spending on goods and services, prompting state governments to increase expenditures in sectors like infrastructure, health, education, and public welfare.
The state-wise allocation is based on a formula recommended by the Finance Commission, which considers factors such as population, area, income disparity, and infrastructure needs.
41% of the net proceeds of the shareable Central taxes should be allocated to the states as recommended by the 16th Finance Commission.
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