NEW DELHI: The Union government on Thursday released ₹1.09 trillion to states as their share of central taxes, advancing the monthly transfer by five days to help them meet festival season spending requirements and accelerate capital expenditure, the finance ministry said in a statement.
The transfer follows another release of the same amount on 31 October, over and above the regular monthly devolution. The 31 October payment was the second additional instalment in the current financial year, following an identical release on 1 August. The additional transfers are aimed at strengthening state finances, enabling governments to accelerate capital expenditure and fund development and welfare-related spending, the said.
The timing of the advance coincides with an extended festival calendar, which began with the nine-day Navratri celebrations on 11 October and continued through Dussehra on 20 October. Diwali falls on 8 November, followed by Bhai Dooj and the four-day Chhath Puja celebrations beginning 13 November. Guru Nanak Jayanti and Christmas on 25 December also fall within the period.
Uttar Pradesh received the largest share of the latest instalment at ₹19,208 crore, followed by Bihar at ₹10,845 crore and Madhya Pradesh at ₹8,010 crore. West Bengal received ₹7,866 crore, Maharashtra ₹7,022 crore and Rajasthan ₹6,460 crore.
Among other states, Odisha received ₹4,819 crore, Andhra Pradesh ₹4,597 crore, Karnataka ₹4,504 crore, Tamil Nadu ₹4,466 crore and Gujarat ₹4,094 crore. Chhattisgarh and Jharkhand received ₹3,602 crore and ₹3,660 crore, respectively, while Assam was allocated ₹3,552 crore, according to ministry data.
devolution is a key source of revenue for states, giving them funds to finance their expenditure priorities.
Under the recommendations of the 16th Finance Commission, accepted by the Centre in the Union budget for this fiscal year, states will receive 41% of the divisible pool of central taxes over the five-year period from fiscal year 2027 (FY27) to FY31. The divisible pool comprises central tax revenues after excluding cesses, surcharges and the cost of collection.
The Union budget estimates tax devolution to states at ₹15.26 trillion in FY27, up from ₹13.93 trillion in the revised estimates for FY26. The Centre has also provided ₹1.4 trillion in Finance Commission grants for the current financial year, including grants for rural and urban local bodies and disaster management.
Together, tax devolution and Finance Commission grants are expected to channel ₹16.56 trillion to states in FY27 through the Finance Commission route.
However, the Centre’s monthly accounts point to a slower pace of tax transfers in the initial months of the financial year. As of August, states had received ₹5.90 trillion as their share of central taxes, ₹60,243 crore less than in the corresponding period a year earlier, according to the finance ministry’s monthly review of government accounts.
“The latest release will provide states with additional liquidity ahead of the festive season and help them manage expenditure without waiting for the originally scheduled payment date,” said Dharmveer, assistant professor, Economics at the Delhi School of Economics.
