The central government disbursed grants-in-aid totaling over ₹8.28 lakh crore to states between FY2019 and FY2023, following recommendations from successive finance commissions.
West Bengal received the highest allocation of ₹69,465.22 crore during the five-year period ending FY2023, followed by Uttar Pradesh with ₹63,152.96 crore, Kerala with ₹62,496.31 crore, and Andhra Pradesh with ₹59,754.69 crore, according to data from the finance ministry released on Friday.
Conversely, Goa, Arunachal Pradesh, and Sikkim received the lowest amounts of funding under the grants, at ₹489.50 crore, ₹2,129.53 crore, and ₹2,219.10 crore, respectively.
Grants-in-aid represent financial assistance provided by the Centre to states for specific projects, serving as a significant mechanism for expenditure in delivering public goods. They are utilized for various purposes such as addressing non-plan revenue deficits, enhancing elementary education, environmental initiatives, infrastructure maintenance, and disaster relief efforts, as outlined by the Comptroller and Auditor General of India (CAG).
Interestingly, the total volume of grants-in-aid exhibited a consistent annual increase from FY2019 to FY2022 before experiencing a decline to a three-year low in FY2023.
Jammu & Kashmir, post its reorganization into two union territories in 2019, namely Jammu & Kashmir and Ladakh, did not receive any grants-in-aid between FY2021 and FY2023.
A spokesperson for the finance ministry did not respond to inquiries sent via email.
While the central government’s capital expenditure surged by 29% to ₹4.9 lakh crore during the first half of FY2024, state-level capital expenditure increased by 52.8% during the same period.
Nevertheless, several states have fallen short of meeting their budgeted capital expenditure targets. According to available data for 23 states, despite a substantial annual increase in state capital expenditure during the first half of FY2024, states have only utilized 25.2% of their budgeted capital expenditure during this period, as per a recent Bank of Baroda report.
The report highlights disparities among states, with Telangana, Madhya Pradesh, Andhra Pradesh, Bihar, and Kerala utilizing a significant portion of their capital expenditure during the initial half of FY24, whereas states like Uttar Pradesh, Maharashtra, Gujarat, and Karnataka have utilized less than 30% of their budgeted capital expenditure during the same timeframe.
