‘Viksit States’ for ‘Viksit Bharat’: Government clears Additional 82,745 crores for State

On 30 May 2025, the Ministry of Finance announced approval of an additional installment of Tax Devolution amounting Rs. 81,735 crore to State Governments, via their X account. MoF mentioned the release is in addition to the regular monthly installment which is scheduled to be released on 10th June 2025. 

A total of 14.222 lakh crore was announced by the Indian government for Tax Devolution to states, for the financial year 2025-2026.

Purpose

The ‘Principle of Cooperative Federalism’, is what has been considered for this additional installment of devolution, with the eventual aim of becoming ‘ Viksit Bharat’ by 2027. The MoF has stated in their tweet the goal can only be achieved with ‘Viksit States’.

Uttar Pradesh (₹31,039.84 crore), Bihar (₹17,403.36 crore), Madhya Pradesh (₹13,582.86 crore), and West Bengal (₹13,017.06 crore) are among the major beneficiaries.  

Note: After two Union Territories were carved out from the erstwhile state of Jammu and Kashmir, the 15th Finance Commission report stated transferring of 41% share of tax revenues to the  state.

How will this help States

The devolvement will enable the States to speed up their capital spending,finance their development, make welfare-related expenditure and obtain resources for the priority projects. States can use this money to implement projects that specifically cater to regional needs, with less dependency on the central grants and heavy borrowings.