The Centre has approved an additional ₹81,735 crore as tax devolution to states, enhancing their fiscal capacity. Finance Minister Nirmala Sitharaman announced the move, highlighting its role in cooperative federalism and India’s 2047 development vision.
In a significant move to boost the fiscal strength of state governments, the Centre has sanctioned an additional ₹81,735 crore as tax devolution, which will be released on June 2, 2025. This announcement was made by Union Finance Minister Nirmala Sitharaman during her address at the Lakshmipat Singhania-IIM Lucknow National Leadership Awards held in New Delhi on Friday.
This supplementary release is over and above the regular monthly tax devolution of ₹81,735 crore scheduled for June 10. With this, the states are set to receive a total of ₹1.63 lakh crore in just the first ten days of June.
Highlighting the Centre’s commitment to cooperative federalism, FM Sitharaman said, “The additional instalment of devolution to states is in line with the principle of cooperative federalism and the vision of becoming ‘Viksit Bharat’ by 2047, which can be realised through ‘Viksit States’, as envisioned by Prime Minister Narendra Modi.”
The Finance Minister emphasized that this timely release of funds will empower states to ramp up capital spending, finance developmental and welfare-related expenditure, and support priority infrastructure and social sector schemes. “This will enable states to push forward their growth agendas without delay,” she noted.
Sitharaman also touched upon India’s robust economic performance, revealing that the country registered a real GDP growth of 7.4% in the fourth quarter (Q4) of FY 2024-25. For the entire fiscal year, India’s real GDP growth stood at 6.5%, maintaining its status as the world’s fastest-growing major economy for the fourth consecutive year.
“India’s industry and manufacturing activity performed well during the last quarter, showing our economy’s resilience and capacity to sustain high growth,” she remarked.
The Finance Minister also highlighted the importance of investing in science and technology as critical components of India’s long-term development strategy. She pointed out that the government, under PM Modi’s leadership, has consistently prioritized futuristic and innovation-driven sectors.
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“PM Modi looks at futuristic sciences as well and wants to invest in all of them. We need to be futuristic, and the kind of progress that we are seeing assures me that with the industry leading in such areas, we are well on track to becoming a developed nation by 2047,” she added.
She concluded by underlining India’s growing global stature, driven by its human capital and excellence across fields. “We are at a point in India’s history where belief in our abilities and confidence in our nation’s direction is key. We are compelling the world to look at India with awe,” Sitharaman said.
This move comes at a critical juncture for states, many of which are gearing up for infrastructure expansion, social welfare improvements, and economic revitalization efforts. With additional central funds now available, states are better equipped to implement their vision of inclusive and sustainable development.
