NEW DELHI: Finance Minister Nirmala Sitharaman on Monday said that instead of regular tax devolution, it will front-load Rs 95,082 crore of advance payment of devolution to states in November so that they can spend and boost economic activities.
“Many states suggested that it would be helpful for them to get a part of the tax devolution frontloaded. This being an exceptional year, states will not be short of money when all of us are pushing for infrastructure. I have suggested to the finance secretary that on November 22, instead of the normal monthly installment of tax devolution amount of Rs 47,541 crore, to release another Rs 47,541 crore - a total of Rs 95,082 crore will be given to states on November 22,” Sitharaman told reporters.
She was addressing media after meeting the finance minister and chief ministers on Monday, stretched by about 7 hours to understand what’s states’ perspective and requirements of infrastructural needs.
“We have frontloaded many of the dues to states, which have been duly recognized by states. The 50-year interest-free capital expenditure money given to states, almost like a grant, has been well-received and many of the states very openly said that they would want the scheme to be continued because they emphasis is on capital expenditure unless states and center put the money for infrastructure building the ripple effects for promoting better and speedier growth will be not as desirable as we wish to have it,” Sitharaman added.
Finance Secretary TV Somnathan, however, assured that the frontloading to devolution does not mean states are short of cash and most of the states maintain positive cash balance.
“As on October 30, there is Rs 2.66 lakh crore positive cash balance among the states and out of 29 states plus the UT of J&K only four had negative cash balance,” Somnathan added.
“We had very key ideas coming from states, and generic requests; examples — the way in which some states have given project approvals, better dispute resolution mechanisms, enhancing road connectivity, ideas for immediate job creation,” Sitharaman said, adding that MP and Sikkim asked for relaxing FRBM clause.