Union Government accepts 14th Finance Commission

February 24, 2015

Union government has accepted recommendations of the 14th Finance Commission (FC) as per its agenda of cooperative federalism.
The accepted recommendations are for the five-year period 2015-16 to 2019-20.
Key facts

Government has accepted FC’s recommendation to increase the devolution of tax receipts from the Centre to the states to 42 percent. Previously, 13th FC had pegged the states’ share at 32 per cent.
The share of States in the Centre’s net tax receipts will go up by Rs. 1,78,000 crore in 2015-2016. It is the largest ever change in percentage of devolution.
As per the increased devolution suggested by 14th FC, States will get Rs 3.48 lakh crore in 2014-15 and Rs 5.26 lakh crore in 2015-16.
Higher tax devolution will allow states greater autonomy in financing and designing of schemes as per their needs and requirements.
FC also recommended the distribution of grants of Rs 2 .88 lakh crore to states for strengthening duly elected gram panchayats and municipal bodies for five years.
FC also has identified 11 revenue deficit states and granted them Rs 48,906 crore as additional resources for the year 2015-16.

Background
The 14th Finance Commission was constituted in January 2014. Commissions chairman was former RBI governor Y V Reddy and its members were Sushma Nath, M. Govinda Rao, Abhijit Sen, Sudipto Mundle.
In December 2014, Commission had submitted its report to the President Pranab Mukherjee.

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