Centre advances Rs 1.09 lakh crore tax devolution to states to boost spending
New Delhi, August 1
The Union Government on Saturday released an additional instalment of Rs 1,09,019 crore as tax devolution to state governments, ahead of the regular monthly transfer due on August 10, to help states step up capital spending and development works.
According to a Ministry of Finance release, the amount released on August 1 is "in addition to the normal monthly devolution to be released on 10th August 2026."
"This release is in line with the commitment of Government of India to strengthen the finances of States to accelerate their capital and developmental expenditure," the Ministry of Finance said in the release.
As per the ministry's state-wise distribution of net proceeds of Union taxes and duties for August 2026, Uttar Pradesh received the highest allocation at Rs 17,908 crore, followed by West Bengal at Rs 7,986 crore and Maharashtra at Rs 7,022 crore.
Among other major allocations, Rajasthan received Rs 6,800 crore, Bihar Rs 5,893 crore, Tamil Nadu Rs 4,600 crore, Gujarat Rs 4,074 crore, Andhra Pradesh Rs 4,037 crore, and Madhya Pradesh Rs 3,810 crore.
Smaller states and Union Territories also received their respective shares, including Goa (Rs 399 crore), Sikkim (Rs 203 crore), Mizoram (Rs 612 crore), Nagaland (Rs 824 crore), and Tripura (Rs 699 crore).
Tax devolution is the constitutionally mandated transfer of a share of the Centre's divisible tax pool to states, based on the recommendations of the Finance Commission. The transfers form a key source of untied revenue for states and support spending on infrastructure, social welfare and other development programmes.
The Finance Ministry said the advance release reflects the Centre's continued effort to ensure that states have adequate financial resources to sustain public investment and developmental activities.
— ANI
Reader Comments
Interesting timing - releasing this before the regular monthly transfer. Probably trying to ease pressure on state finances ahead of the festive season. But I wonder if this is just political posturing before elections in some states. The devil is always in the details of how these funds actually get spent on the ground.
Honestly, while this is welcome, why wait till August to release the advance? States had been asking for more funds for months now. Also, the way the money is distributed - is it purely population-based or does it take development needs into account? Smaller states like Mizoram and Nagaland get so little, how will they catch up? 🤔
A smart fiscal move. Front-loading funds to states lets them accelerate capital spending in the first half of the fiscal year. This aligns with the broader macro strategy of boosting growth through government investment. It'll be interesting to see if this changes the investment trajectory in the coming quarters.
Shabash Centre! This is the right approach, no doubt. But I want to see the ground reality of how much of this actually reaches the panchayats and municipalities. We've seen many schemes where funds get stuck at state headquarters. Need more transparency in the flow of funds - the common man is still waiting for good roads and clean water. 💧
A 15th Finance Commission recommendation in action here. The advance of one instalment might sound good, but states also need a stable, predictable revenue stream to plan long-term projects. This one-time advance is helpful but shouldn't be seen as a substitute for a more comprehensive fiscal federalism framework.
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