Government releases 7183 crore deficit grant to 14 states

Subject: Economics

Context: Finance ministry released the monthly instalment of the revenue deficit grant of 7183 crores.

Concept:

About the Post Devolution Revenue Deficit (PDRD):

The Centre provides the Post Devolution Revenue Deficit Grant to the 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 the States post-devolution (of the divisible tax pool of the Centre).
The 15th Finance Commission has post-devolution revenue deficit grants amounting to about 3 trillion over the five-year period ending FY26.
The number of states qualifying for the revenue deficit grants decreases from 17 in FY22, the first year of the award period to 6 in FY26, the last year.
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.

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.