On Monday, the Finance Minister, Nirmala Sitharaman, stated that the Central Government is committed to early fund release under different heads to states. She also said there has already been a transfer of funds for FY22.
In the finance minister’s reply to Rajya Sabha on the supplementary demands for grants for FY22 discussion, she stated that it is in the Centre’s interest to ensure the availability of funds to states early so that they can spend in time. The Rajya Sabha returned two appropriation bills already cleared by Lok Sabha, endorsing additional spending for FY22 and FY19, respectively.
Fund Transfer to States
The finance minister stated that the Central Government has an interest to help states get funds on time. States require money during these times when they are at the front-end in reviving their economy and also to come out of the pandemic related setbacks.
The finance minister also stated that the states had been transferred the entire Rs.1.59 trillion as decided in the GST Council that was to be transferred to them in FY22 instead of the GST compensation.
The Centre has released the entire Rs.7.45 trillion as projected in the revised estimate of FY22 as devolution of states’ share of Centre’s tax revenue to enable the states to spend in time. The finance minister stated that the Centre has not held back the devolution to the state governments.
Recapitalisation of Public Sector Insurance Companies
The finance minister stated that Rajya Sabha cleared the proposal of Rs.5,000 crore for recapitalisation of public sector insurance companies in the third batch of supplementary demands for grants. It is linked with improvements in specific performance indicators of these companies.
The recapitalisation of public sector insurance companies will help them to improve the overall financial condition and reduce their losses. The eligible LIC policyholders will be entitled to subscribe to the insurer in its upcoming Initial Public Offer (IPO). The finance minister said a reservation for policyholders of up to 10% of the issue size plus a discount on the offer price.
For any clarifications/feedback on the topic, don’t hesitate to contact the writer at mayashree.acharya@cleartax.in.
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