The Union government has released ₹46,038 crore to States as their share of central taxes and duties for May.
As with the April instalment, the devolution of taxes has been calculated on the basis of tax receipts projected in Budget 2020-21 and not according to actuals, which have been much lower due to the impact of the COVID-19 pandemic and lockdown.
“Government of India’s prime objective has been protecting States’ revenues & meeting their liquidity requirements in their fight against #COVID19 global pandemic,” said a Finance Ministry tweet, announcing the fund release.
On Tuesday, the Centre also released ₹5,005 crore to States as the first instalment of a Finance Commission grant for smaller cities.
“This would provide the States with vital financial resources at a critical time,” Finance Minister Nirmala Sitharaman tweeted on Wednesday. The money is intended for “non-million plus” cities or those with a population below one million.
It has been released as a grant ‘in advance’ to 28 States, pending the finalisation of operational guidelines. The funds are to be passed on directly to urban local bodies within 10 days, without any deduction by State Finance departments.
In case of a delay beyond 10 days, States will have to pay interest.
These are untied grants, meaning the funds can be used by local bodies for any location-specific needs, but cannot be used to pay salaries or other establishment expenditure.