Tax devolution from the central pool to the states is based on recommendations of the Finance Commission without any exception, Union finance minister Nirmala Sitharaman assured the members of Rajya Sabha on Thursday.
There has been a significant jump in states’ share in central taxes and grants during the 10-year of the Narendra Modi-led NDA as compared to the previous 10-year UPA regime, she said, responding to criticism in the house and outside from southern states of Kerala and Tamil Nadu, who allege that the Union government is withholding tax revenues due to them.
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“There is no way… that any violation has happened. I followed it (the finance commission’s recommendation) to the last word,” she said in the House while replying to the debate on the interim budget.
In the budget estimate (BE) of 2024-25, the total resources being transferred to states, including devolution of the states’ share from the taxable pool, grants and loans and releases under the centrally-sponsored schemes, are expected to be ₹22,22,264 crore, an increase of ₹4,13,848 crore over the actuals of 2022-23. “This is 47% of the 2024-25 budget,” she added.
“So, payments are happening to the states in time and there is no amount held back,” she said, citing data related to Kerala and Tamil Nadu. Tax devolution to Kerala in the period 2004-14 was ₹46,303 crore. In the NDA regime – during 2014-24 (as on December 22, 2023), the total amount released to the state was ₹1,50,140 crore, a 224% increase, she said.
Apart from the tax devolution from the central pool, grants and aid from the Union government to Kerala in 2004-14 was ₹25,629.70 crore. This rose to ₹1,43,117 crore in 2014-24, she said. “So, compared to the 10 years of UPA [in the ] 9 years of NDA, there is 458% increase,” she added.
Besides, the Union released loans under the 50-year interest-free loans for capital expenditure of ₹82 crore in FY21, ₹239 crore in FY22, ₹1,903 crore in FY23. The scheme was started in the post-Covid period from 2020-21 for rapid economic recovery and to boost growth through public expenditure in creating infrastructure across the country. In addition to this, ₹18,087 crore have also been provided to the state as an additional borrowing in 2020-21 in view of the pandemic, she said.
Giving details of money released to Tamil Nadu, she said, tax devolution for 10 years (2004-14) to the state during the UPA regime was ₹94,977 crore. As against that, during the current government — 2014-24 (as on December 22, 2023) – this amount rose to ₹2,77,444 crore, a 192% increase.
The state received grants from the Union government to the tune of ₹57,924.42 crore in 2004-14 (during the UPA regime) as compared to ₹2,30,893 crore, about four-time more or about 300% increase in the current NDA government, she said. Besides, the NDA government also gave special assistance of 50-year interest-free loan. While Tamil Nadu did not take the loan in the first year,in the second year (FY22) it received ₹505.50 crore for capital expenditure. The amount jumped to ₹3,263 crore in FY23 and as on December 11, 2023 (in FY24) it is ₹2,643.65 crore, she said.
The Rajya Sabha passed and returned the Finance Bill, 2024, the interim budget and other appropriation bills on Thursday marking the end of the budget exercise in Parliament as the Lok Sabha passed these money bills on Wednesday. Sitharaman told the House that the focus of the Modi government continues to remain on capital expenditure to sustain the higher GDP growth with ₹11.11 lakh crore capital expenditure plan in FY25. She also said that the government has not reduced any budget for key sectors including welfare programmes and social sectors.
The House discussed the Union interim budget 2024-25, the Union finance Bill for FY25 and its supplementary demands for grants for 2023-24. It also discussed Jammu & Kashmir’s interim budget for part-year of FY25 and its supplementary demands for grants pertaining to FY24.
