07 May 2021 Post Devolution Revenue Deficit Grant
Post Devolution Revenue Deficit Grant
Context:
The Finance Ministry released the second monthly installment of revenue deficit grant of ₹9,871 crore to 17 States. With the release of the second installment, a total amount of ₹19,742 crores has been released in the first two months of the current financial year as Post Devolution Revenue Deficit Grant to the States.
Base:
- 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 installments to meet the gap in revenue accounts of the States post-devolution.
What is Post Devolution Revenue Deficit Grant?
About a third of the total revenue collected by the Centre is directly transferred to states as their share in the divisible pool. However, the Finance Commission also provides a mechanism for compensation of any loss incurred by states, which is called post-devolution revenue deficit grants. This Finance Commission Grant forms the second largest chunk of Finance Commission transfers after the assistance to local rural bodies.
Development:
- The 15th Finance Commission has recommended Post Devolution Release Deficit grants to 17 States based on the gap between the assessment of revenue and expenditure of the State.
- The States recommended for Post Devolution Revenue Deficit Grant are Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Karnataka, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttarakhand, and West Bengal.
- The 15th Finance Commission has recommended a total Post Devolution Revenue Deficit Grant of ₹1,18,452 crore to 17 States in the financial year 2021-22. The grant is released to the States in 12 monthly installments.
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Yojna IAS Current Affairs Team
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