Special Report - The Fourteenth Finance Commission: A Fair Share?

Indian constitution requires formation of a finance commission every five years or earlier to decide the tax sharing between the centre and states and also among states. The Fourteenth Finance Commission headed by former RBI governor Dr. Y V Reddy has recommended 10% increase in vertical devolution to states. This means the share of states in the divisible tax pool will increase from 32% to 42%. However, aggregate transfers to states as a percentage of divisible pool will remain almost at the same level at around 62-64% over the next five years as states will have to share more burden in centrally sponsored schemes. The commission’s chairman Dr. Y V Reddy explains to Rajya Sabha TV that the idea was to give the states more freedom in spending the funds received from the centre while retaining the same fiscal space for the centre for discharging its own function. Anchor: Krishnanand Tripathi Programme includes views of: Dr. Y V Reddy (Chairman, Fourteenth Finance Commission) ; Sukhendu Sekhar Roy (Member, Rajya Sabha (AITC), West Bengal) ; P Rajeeve (Member Rajya Sabha, CPI(M), Kerala) ; Priya Ranjan Dash (Economic Journalist)