On May 11, 2020, the Government of India released Rs 6,195 crores to 14 states. This is the second equated monthly installment of Post Devolution Revenue Deficit.
Highlights
- The grant allocated to the states will act as additional source of income to the states.
- The grant was recommended by the 15th Finance Commission.
- The Central Government under the grant allocated Rs 1,276 crores to Kerala, Rs 952 crores to Himachal Pradesh, Rs 638 crores to Punjab, Rs 631 crores to Assam, Rs 491 crore to Andhra Pradesh, Rs 417 crore to West Bengal and Rs 423 crore to Uttarakhand.
Significance
- The grant will help the states make preventive and mitigation measures to contain COVID-19.
- The funds will be used for sample collection, quarantine facility, screening and setting up of additional testing laboratories.
- The funds will also be used for purchase of PPE (Personal Protection Equipment), thermal scanners, air purifiers, ventilators, consumables in government hospitals.
Revenue Deficit
- The revenue deficit covers the gap between revenue and expenditure of a state.
- According to Fiscal Responsibility and Budget Management Act, 2003, the states should maintain revenue deficit of zero.
- According to the Constitution of India, state cannot raise a loan without consent of the Centre.
- This is why, the Kerala Government in 2019 couldn’t claim the flood relief grants from Saudi Arabia. The centre did not permit.
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