Fund transfers to states under decline

The grants, meant to cover post-devolution revenue shortfalls, fell to ₹24,483 crore in 2024-25, from ₹1.18 trillion in 2021-22

- Rhik Kundu

The Centre's revenue deficit grants to states have sharply declined in recent years, reducing the funds states receive under the 15th Finance Commission's recommendations.

The grants, meant to cover post-devolution revenue shortfalls, fell from ₹1.18 trillion in 2021-22 to ₹24,483 crore in 2024-25, with a further drop to ₹13,705 crore expected in 2025-26, budget documents show.

The steep decline reflects a broader fiscal strategy aimed at reducing states' reliance on central transfers and promoting financial self-sufficiency.

The post-devolution revenue deficit grant, provided under Article 275 of the Constitution, helps states bridge gaps in their revenue accounts after tax devolution.