Bhubaneswar: In a move to bolster state development and welfare initiatives, the Central Government on Friday released ₹7,834.80 crore to Odisha as part of its tax devolution share for January 2025. This allocation is part of an advance installment of ₹1,73,030 crore distributed to state governments ahead of schedule to accelerate capital expenditure and improve public services.
Expressing gratitude, Chief Minister Mohan Majhi lauded the Centre’s timely support, emphasizing its importance in driving Odisha’s developmental goals. He acknowledged the proactive role of Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman in ensuring states receive the necessary financial resources promptly.
The January tax devolution saw a significant increase, nearly doubling from ₹89,086 crore allocated in December 2024 to ₹1,73,030 crore. According to the Centre, this enhanced allocation reflects its commitment to empowering states in implementing infrastructure projects and welfare schemes effectively.
Framework of Tax Devolution
Tax devolution, governed by the Finance Commission, ensures a fair distribution of Union tax revenues among states. For the 2021–2026 period, the 15th Finance Commission has allocated 41% of central taxes to states, slightly adjusted from the 42% recommended earlier due to the creation of the Union Territories of Jammu and Kashmir and Ladakh.
Odisha’s allocation of ₹7,834.80 crore forms part of a nationwide distribution. Among other states, Uttar Pradesh received the highest share of ₹31,039.84 crore, followed by Bihar with ₹17,403.36 crore and West Bengal with ₹13,017.06 crore. Smaller states like Goa and Sikkim were allocated ₹667.91 crore and ₹671.35 crore, respectively.
Criteria for Distribution
The Finance Commission considers multiple factors for fund allocation, including:
- Income Levels: 45% weightage
- Population: 15%
- Geographical Area: 15%
- Forest and Ecology: 10%
- Tax and Fiscal Efforts: 2.5%
- Demographic Performance: 12.5%
Strengthening Odisha’s Development Agenda
This financial boost is expected to significantly enhance Odisha’s ability to implement infrastructure projects and welfare programs across the state. It also underscores the Centre’s focus on fostering regional development and ensuring resources are available for state priorities.