The Centre on Wednesday released over ₹1.16 lakh crore to States, equivalent to two monthly instalments of tax devolution, to help front-load State governments’ capital spending abilities in this financial year.
Coming soon after the expiry of the assured Goods and Services Tax (GST) compensation to States from this July, economists expect the move to give States' twice the monthly share of net proceeds of union taxes and duties for August will bolster their cash flows and nudge them into planning and executing capex outlays.
The development also assumes significance as some Chief Ministers raised concerns about their dwindling resources and sought more funds from the Centre through extension of the GST compensation period and a higher share in the divisible pool of taxes, at NITI Aayog’s governing council meeting chaired by Prime Minister Narendra Modi on August 7.
