Center to give Rs 95,000 crore as tax transfer amount to states

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This has been done at the request of some states, which want an increase in the share of tax transfer amount to help meet capital expenditure.

The states are entitled to 41% of the central taxes as per the formula of the Finance Commission. It is given in 14 installments in a financial year.

Around 20 states have incurred higher capital expenditure by about 80% during the first nine months of the financial year 2021-22.

Other suggestions given by the center for capital expenditure

  • In states that are excluded from the national monetization pipeline, potentially monetizable assets can be used to augment the capital available to build infrastructure.
  • States should also reform the power sector, apart from expediting measures to attract investment and ease of doing business.
  • Land bank should be created to facilitate land acquisition processes and leverage during investment, as availability of land is one of the major constraints in project development.
  • The provision of Viability Gap Funding (VGF) will help in financing socially relevant but economically unviable projects.
  • It may be noted that earlier, a capital outlay of Rs 35.54 lakh crore was allocated in the Union Budget for the year 2021-22, which is 34.5% higher than the previous year.

Source – The Hindu

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