The major slowdown in the economy of the country due to prolonged lockdown on account of Coronavirus pandemic has impacted the Central devolutions to the states to a large extent.
For instance, the Centre has released only Rs 982 crore to Telangana on towards April’s Central tax devolution, a sharp cut of 17.81 per cent in the share of revenues to the state.
Telangana was expecting to get Rs 1,195 crore this month, but the Centre unexpectedly reduced the tax devolution without taking the State into confidence.
Further, the repeated requests of Chief Minister K Chandrashekhar Rao for giving exemptions and raising FRBM (Fiscal Responsibility and Budget Management) limits have not been considered by the Centre, which, instead, imposed a cut in the funds due to the State.
Similarly, Andhra Pradesh was sanctioned an amount of Rs 1,892.64 crore, as against Rs 2,126.56 crore supposed to be given towards tax devolution.
The same percentage of cut was imposed on all states in the Central tax devolution, despite the Centre being fully aware that the State governments are unable to mop up the revenues due to the lockdown announced to contain the coronavirus spread.
The Union Finance Ministry issued sanctions for April instalment of the Central tax devolution amounting to Rs 46,038.10 crore on Monday.
The tax devolution is done in 14 instalments during a year, and the Centre was due to pay three instalments up to the month of March payable in April.
The tax devolution is done as per the recommendations of the 15th Finance Commission, which suggested that the 41 per cent of the divisible pool be devolved to the States in the vertical devolution formula.
