Delhi Bureau
Summary: The Union government has released an additional instalment of Rs 1,09,019 crore as tax devolution to state governments ahead of the festive season. Uttar Pradesh has received the largest share at Rs 19,208 crore, while Madhya Pradesh gets Rs 8,010 crore. The amount is over and above the regular monthly devolution and is the second additional instalment in the current financial year.
How much was released and who got what
The Finance Ministry announced on the night of 31 October that an additional instalment of tax devolution totalling Rs 1,09,019 crore had been released to the states. The stated purpose is to help states accelerate capital spending and finance development and welfare-related expenditure in view of the upcoming festive season. Because this is over and above the regular monthly transfer, states will receive extra funds in November in addition to their normal monthly instalment, which is due in mid-November as scheduled.
Uttar Pradesh received the highest allocation at Rs 19,208 crore, about 17.6 per cent of the total. Bihar follows with Rs 10,845 crore and Madhya Pradesh with Rs 8,010 crore. West Bengal received Rs 7,866 crore, Maharashtra Rs 7,022 crore and Rajasthan Rs 6,460 crore. Odisha got Rs 4,819 crore, Andhra Pradesh Rs 4,597 crore, Karnataka Rs 4,504 crore and Tamil Nadu Rs 4,466 crore. The smallest allocation went to Sikkim at Rs 365 crore.
This distribution is not a discretionary grant. Each state’s share is fixed by a formula that takes into account factors such as population, area and income distance, which is why larger states receive more in absolute terms while every state receives its due share.
What Rs 8,010 crore means for Madhya Pradesh
Madhya Pradesh’s share of Rs 8,010 crore is about 7.3 per cent of the total release and the third-largest allocation among states. The timing is significant: the state is currently celebrating its 71st Foundation Day, with a three-day Rajyotsav under way in Bhopal. The additional funds give the state government greater financial room for development works and welfare schemes during the festive season.
The money goes into the state’s general treasury rather than being earmarked for any single programme, so the government can use it for capital works such as roads, drinking water, irrigation and urban infrastructure, as well as for clearing dues under various schemes. With the regular monthly instalment also due in mid-November, Madhya Pradesh will receive two inflows this month, easing immediate fiscal pressure without adding to borrowing.
What tax devolution is
Tax devolution is the share of central taxes transferred to the states. The Union government collects taxes such as GST, income tax and corporation tax, and a fixed percentage is shared with the states. Under the present arrangement, 41 per cent of central taxes is devolved to the states in 14 instalments during a financial year.
The system exists because states carry major responsibilities — health, education, police, roads and drinking water — while a large part of tax collection accrues to the Centre. Devolution gives states a regular and predictable source of revenue that they can spend according to their own priorities, distinct from scheme-specific grants from the Centre. An additional instalment during the festive season is especially useful, as demand rises, construction activity picks up and state spending increases.
Second additional instalment this financial year
This is the second additional instalment released in the current financial year 2026-27; an additional amount was also released in August. Finance Minister Nirmala Sitharaman has said the additional transfer reflects strong economic activity and improved tax collections. Available data indicates that nearly Rs 7 lakh crore was devolved to states in the first half of 2026-27, from April to September, through regular and additional instalments combined.
What happens next
The funds will reach state treasuries in early November, so the first effects should be visible in the coming weeks as states step up capital works. The regular monthly instalment in mid-November will add further to state receipts. No official announcement has been made about any further additional instalment, so that will depend on tax collections and economic activity in the months ahead.
For Madhya Pradesh, the additional Rs 8,010 crore arriving during its Foundation Day celebrations is a positive signal, giving the state more resources to push development works and people-focused schemes. Details of the Finance Ministry’s announcement are available here: https://www.thehindu.com/business/centre-releases-additional-instalment-of-tax-devolution-of-109-lakh-crore-to-states/article71650532.ece
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