Finance Ministry releases Revenue Deficit Grant To 17 States

Union Finance Ministry has released fourth monthly instalment of revenue deficit grant of ₹ 9,871 crore to 17 states.

Highlights

• With this release, Centre has released a total of ₹ 39,484 crore to all eligible states as revenue deficit grant in financial year 2021-2022.
• Andhra Pradesh, Haryana, Assam, Himachal Pradesh and Karnataka are among 17 states that have received the grant.

Background

15th Finance Commission had recommended a total revenue deficit grant of Rs 1,18,452 crore in financial year 2021-22 to 17 states. Out of this amount, Rs. 39,484 crores have been released so far which accounts for 33.33 per cent of total amount. 33.33 percent grant has been released in four installments.

How revenue deficit is provided to states?

Revenue deficit or post devolution revenue deficit grant is provided to states in accordance with Article 275 of the Constitution. Grants are released on the recommendations of 15th Finance Commission in monthly installments. It is provided to meet the gap in revenue accounts of states post devolution. 15th Finance Commission has recommended post devolution revenue deficit grants of about Rs. 3 trillion over five-year period ending in Financial Year 2026. Number of states qualifying for revenue deficit grants also decreased from 17 in Financial Year 2022 to 6 in Financial Year 2026.

Which states are eligible for grants?

Eligibility of states to receive this grant and quantum of grant is decided by Finance Commission on the basis of gap between assessment of revenue and expenditure of state after reviewing and considering the assessed devolution for financial year.

Article 275 of Constitution

Article 275 of constitution provides for payment of amount that Parliament may provide as grants-in aid to States which are in need of assistance. Gants are paid out of Consolidated Fund of India each year. Different sums are fixed for different States.

Month: Current Affairs - July, 2021