Daijiworld Media Network - New Delhi
New Delhi, Nov 1: The Central government on Saturday released an additional instalment of Rs 1.09 lakh crore as tax devolution to states in October, providing a financial boost ahead of the festive season and enabling states to accelerate development and welfare expenditure.
The Finance Ministry said this was the second additional instalment released during the current financial year, 2026-27. The additional funds are intended to help states increase capital expenditure and meet their development and welfare-related financial commitments.
"This is the second additional instalment in this financial year," the ministry said in an official statement, adding that the release had been made in view of the upcoming festive season and to enable states to accelerate capital spending.
The additional instalment is also expected to provide states with greater financial flexibility to undertake infrastructure projects and meet expenditure requirements during the festive period.
The Centre had previously released an additional tranche of tax devolution in August this year.
According to the latest data available with the Controller General of Accounts (CGA), the cumulative tax devolution to states during the first half of the financial year 2026-27 had reached nearly Rs 7 lakh crore.
Under the existing system, the Central government generally releases tax devolution to states in 14 instalments annually. The Centre also exercises its discretion to release additional instalments in certain months to provide states with extra financial resources.
As recommended by the Sixteenth Finance Commission, the Centre transfers 41 per cent of the divisible pool of central taxes to states. This arrangement enables state governments to access a share of central tax revenues for meeting their expenditure and development requirements.
The latest release is expected to strengthen the financial position of states and support public spending on infrastructure, development projects and welfare programmes.