Fourteenth Finance Commission: An Analysis of the Key Recommendations

Abstract

The Fourteenth Finance Commission (FFC) has submitted its recommendations for the period 2015-16 to 2020-21. They are likely to have major implications for center-state relations, for union and state budgeting and for the fiscal situation of the center and the states. The spirit behind the FFC recommendations is to increase the automatic transfers to the states to give them more fiscal autonomy and this is ensured by increasing the share of states from 32 to 42 per cent of divisible pool. The FFC has made far-reaching changes in tax devolution that will move the country toward greater fiscal federalism, conferring more fiscal autonomy on the states. It is hoped that the far-reaching recommendations of the FFC will further the Government’s vision of cooperative and competitive federalism.