CONTACT US

084594-00000

About Us  :  Online Enquiry

Download

Post Devolution Revenue Deficit (PDRD) Grant

Post Devolution Revenue Deficit (PDRD) Grant

Why in news?

  • The Ministry of Finance has released the second monthly instalment of Post Devolution Revenue Deficit (PDRD) Grant of Rs. 9,871 crore for the year 2021-22 to 17 States.

Grant details

  • With the release of 2nd installment, a total amount of Rs. 19,742 crore has been released in the first two months of the current financial year as Post Devolution Revenue Deficit Grant to the states.
  • The 15th Finance Commission has recommended Post Devolution Release Deficit grants to 17 States.
  • The States recommended for Post Devolution Revenue Deficit Grant are Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Karnataka, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttarakhand and West Bengal.

About Post Devolution Revenue Deficit (PDRD)

  • The Centre provides the Post Devolution Revenue Deficit Grant to the States under Article 275 of the Constitution.
  • Article 275 provides for the payment of such sums as Parliament may by law provide as grants-in aid to such States as Parliament may determine to be in need of assistance.
  • PDRD is charged on the Consolidated Fund of Indiain each year as grants in aid of the revenues of such States as Parliament may determine to be in need of assistance.
  • As per the recommendations of the Finance Commission, the grants are released in 12 monthly instalments to meet the gap in revenue accounts of the States post-devolution.
  • The Finance Commission provides PDRD grants as a mechanism for compensation of any loss incurred by states.
  • The 15th Finance Commission has recommended PDRD grants over the five-year period ending FY26 to the States based on the gap between the assessment of revenue and expenditure of the State.

Finance Commission Grants

  • The 73rd Constitutional Amendment requires both the Centre and states to help Panchayati Raj institutions to evolve as a unit of self-governance by assigning them funds, functions and functionaries.
  • The Finance Commission Grants, in the Union Budget, provides funds to local bodies, state disaster relief funds and compensates any revenue loss to states after devolution of taxes.
  • The Finance Commission Grants are primarily divided into four sub-heads.
  • Grants for rural local bodies:The three-tier model of governance envisioned in the Constitution assigns clear roles and responsibilities to Gram Panchayats. The Finance Commission recommendations ensure that these local bodies are adequately funded. In fact, nearly half of the Finance Commission Grants in Union Budget goes to village local bodies.              Post Devolution Revenue Deficit (PDRD) Grant
  • Grants for urban local bodies:In addition to units of self-governance at the village level, the Constitution also envisages cities as units of self-governance. Urban local bodies like municipal councils receive the largest chunk of Finance Commission Grants after Rural Local Bodies and Post Devolution Deficit Grants to states.
  • Assistance to SDRF: The central government also provides funds to State Disaster Relief Funds in addition to funding the National Disaster Management Authority (NDMA). The assistance to state government’s disaster relief authorities is provided as per the recommendations of the Finance Commission.
  • Post devolution revenue deficit grants:About a third of the total revenue collected by the Centre is directly transferred to states as their share in the divisible pool. However, the Finance Commission also provides a mechanism for compensation of any loss incurred by states, which is called post-devolution revenue deficit grants. This Finance Commission Grant forms the second largest chunk of Finance Commission transfers after the assistance to local rural bodies.

 

ALSO READ : https://www.brainyias.com/evolution-of-public-sector-undertakings-in-india/

Mussoorie Times

Send this to a friend