Finance Minstry releases 9871 cr as third instalment of revenue grant to 17 states

Finance Minstry releases 9871 cr as third instalment of revenue grant to 17 states

Subject : Economics

Context : With the release of this instalment, total ₹29,613 crore has been released in the first three months of the current financial year as Post Devolution Revenue Deficit Grant to states

Concept :

• The Centre provides PDRD grant to states under Article 275 of the Constitution.
• The grants are released as per the recommendations of the Finance Commission in monthly instalments to meet the gap in Revenue Accounts of states post devolution.
• The 15th Finance Commission has recommended PDRD grants to 17 states — Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Karnataka, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttarakhand and West Bengal.
• The eligibility of states to receive this grant and the quantum of grant was decided by the Commission based on the gap between assessment of revenue and expenditure of the state
• Assessed devolution for financial year 2021-22 was also taken into account by the Commission.
• The 15th Finance Commission has recommended total PDRD grant of ₹1,18,452 crore to 17 states in 2021-22. The grant is released to states in 12 monthly instalments.

Article 275 of the Constitution:

• It provides for the payment of such sums as Parliament may by law provide as grants-in aid to such States as Parliament may determine to be in need of assistance.
• The grants are paid out of the Consolidated Fund of India in each year, and different sums may be fixed for different States.
• These grants are to be of the nature of capital and recurring sums as may be necessary.
• These aim to enable that State to meet the costs of such schemes of development as may be undertaken by it with the approval of the Government of India for the purpose of promoting the welfare of the Scheduled Tribes in that State or raising the level of administration of the Scheduled Areas there in to that of the administration of the rest of the areas of that State.
• Grants are primarily intended to correct Inter-State disparities in financial resources and to coordinate the maintenance and expansion of the welfare schemes of the State Governments on a uniform national level.