Center has released Rs 1.42 trillion in tax devolution to states, boosting their liquidity for spending in the final month of the financial year and potentially reducing their market borrowings.
This release comes after the state government securities’ cut-off yield eased by 2 bps to 7.44% on February 27, with issuance falling below the expected amount for the fifth consecutive week.
The Centre’s increased tax devolution is expected to help states finance social welfare and infrastructure projects.
Additionally, interest-free loans from the Centre have helped states increase their capital expenditure by 40% compared to the previous year.
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