The Finance Commission provides a mechanism for compensating for any the loss incurred by states, called post-devolution revenue deficit grants. On Tuesday the central government granted Rs. 6195.08 crores to fourteen states as the fifth equated monthly installment of the post-devolution revenue deficit grant. Our Finance Minister Nirmala Sitharaman said that this would provide them all additional resources during the COVID-19 crisis.
The post-devolution revenue deficit grant was recommended by the 15th Finance Commission, and an equal first installment of the grant was issued by the Centre to respective states on 11th August. During the widespread of the COVID-19 pandemic this grant will help the state governments to take preventive and mitigation measures for containment of the virus, including setting up quarantine facilities, sample collection, and screening, and setting up additional testing laboratories, etc.
The grant announced to the states in a view to adopt necessary requirements, so that they can use these funds to cover the cost of consumables and purchase of Personal Protection Equipment (PPE) for healthcare, municipal, police and fire authorities, besides the purchase of thermal scanners, ventilators, air purifiers and consumables for government hospitals.
The fourteen states allotted for the grants are Andhra Pradesh, Assam, Himachal Pradesh, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Sikkim, Tamil Nadu, Tripura, Uttarakhand, and West Bengal. The Centre government released an advance payment of over Rs 1,276 crore to Kerala, over Rs 952 crore to Himachal Pradesh and over Rs 638 crore to Punjab, Assam received Rs 631 crore, Andhra Pradesh Rs 491 crore, Uttarakhand Rs 423 crore and West Bengal got Rs 417 crore respectively and the Finance Commission also provides a mechanism for the Centre to compensate for any revenue loss incurred by states, which is referred to as post-devolution revenue deficit grant.
As per the recommendation of the 15th Finance Commission, the Centre has issued equal installments of the grant to states since April. These Finance Commission Grants, in the Union Budget, provides funds to local bodies, state disaster relief funds, and compensates any revenue loss to states after devolution of taxes. This Finance Commission Grant forms the second largest chunk of Finance Commission transfers after the assistance to local rural bodies.
