Centre Releases Rs 1.09 Lakh Crore Tax Devolution to States to Boost Capital Expenditure

August 1, 2026

New Delhi: The Central government on Saturday released an additional tax devolution of Rs 1,09,019 crore to state governments, providing a major financial boost to help accelerate capital expenditure and development projects across the country. The amount has been released ahead of the regular monthly tax devolution scheduled for August 10.

According to the government, the advance release is aimed at strengthening the financial position of states, enabling them to undertake infrastructure projects and meet development and welfare-related expenditure more effectively.

Uttar Pradesh Gets the Highest Share

Among all states, Uttar Pradesh received the highest allocation of Rs 19,208 crore, followed by Bihar (Rs 10,845 crore), Madhya Pradesh (Rs 8,010 crore), West Bengal (Rs 7,866 crore), Maharashtra (Rs 7,022 crore), and Rajasthan (Rs 6,460 crore).

Other major beneficiaries include Odisha (Rs 4,819 crore), Andhra Pradesh (Rs 4,597 crore), Karnataka (Rs 4,504 crore), Tamil Nadu (Rs 4,466 crore), and Jharkhand (Rs 3,660 crore).

The Centre said the early release reflects its commitment to supporting state governments in implementing development initiatives and strengthening public infrastructure.

Funds to Support Development and Welfare Projects

The government noted that the additional tax devolution will help states accelerate capital spending and finance key welfare programmes. A similar additional release of Rs 1,01,603 crore was made in October last year to enable states to increase spending during the festive season.

The latest allocation is expected to improve liquidity for state governments, allowing them to fast-track infrastructure projects, public services, and other priority sectors.

Fiscal Deficit and Revenue Collections Remain on Track

Separately, official data released by the Controller General of Accounts (CGA) showed that India’s fiscal deficit stood at Rs 3.1 lakh crore during the April–June quarter of the current financial year, accounting for 18.2 per cent of the full-year Budget Estimate.

The Centre has projected a fiscal deficit of Rs 16.96 lakh crore, or 4.3 per cent of GDP, for FY27 as part of its fiscal consolidation roadmap.

Meanwhile, net tax receipts increased to Rs 6.4 lakh crore during the first quarter, up from Rs 5.4 lakh crore in the same period last year, reflecting strong growth in both direct and indirect tax collections despite global economic uncertainties.