Centre disburses ₹1.01 lakh crore extra to states ahead of festive season to boost spending

THEBUSINESSBYTES BUREAU

NEW DELHI, OCTOBER 1, 2025

In a move aimed at energizing state finances and fuelling developmental activities during the festive season, the Union government has released an additional tax devolution of ₹1,01,603 crore to state governments, the Ministry of Finance announced on Wednesday.

This special release comes ahead of the regular monthly devolution scheduled for October 10 and is intended to give states greater fiscal flexibility to accelerate capital investment, welfare initiatives, and infrastructure projects. The ministry said the decision underscores the Centre’s commitment to ensuring timely fund flow to the states for sustaining growth momentum.

Among the states, Uttar Pradesh received the highest allocation of ₹18,227 crore, followed by Bihar with ₹10,219 crore, Madhya Pradesh with ₹7,976 crore, West Bengal with ₹7,644 crore, Maharashtra with ₹6,418 crore, and Rajasthan with ₹6,123 crore. Other major beneficiaries include Andhra Pradesh (₹4,112 crore), Odisha (₹4,601 crore), Tamil Nadu (₹4,144 crore), Karnataka (₹3,705 crore), and Jharkhand (₹3,360 crore).

This latest disbursement adds to the ₹4,28,544 crore already devolved to states between April and July 2025 — a figure that is ₹61,914 crore higher than the same period last year. The Centre’s proactive fiscal management, the ministry noted, reflects its emphasis on empowering states to undertake critical spending at a time when festive demand typically drives economic activity.

During the April–July period, the Central government garnered ₹10,95,209 crore in total receipts, amounting to 31.3 per cent of the 2025–26 Budget Estimates (BE). Of this, ₹6,61,812 crore came from net tax revenue, ₹4,03,608 crore from non-tax revenue, and ₹29,789 crore from non-debt capital receipts.

On the expenditure side, the Centre spent ₹15,63,625 crore, representing 30.9 per cent of the BE for 2025–26. Revenue expenditure accounted for ₹12,16,699 crore, while ₹3,46,926 crore went towards capital outlay for infrastructure and asset creation. Interest payments during this period stood at ₹4,46,690 crore, and major subsidies amounted to ₹1,13,592 crore.

With this early devolution, the government aims to ensure that states have adequate liquidity to step up public spending and sustain the growth trajectory during the festive quarter — a period crucial for consumption, employment, and investment revival.