Highlights of the 14th Finance Commission Report

As compared to total devolutions in 2014-15, the total devolution of states in 2015-16 will increase by over 45 per cent

FINANCIAL BLUEPRINT

Highlights of the 14th Finance Commission’s recommendations

• Devolution to states: States’ share in net proceeds from tax collections be 42% — a huge jump from 32% recommend by the 13th Finance Commission, and the largest change ever in the percentage of devolution

• Big jump in tax share: Compared with 2014-15, the total devolution to states in 2015-16 will increase by over 45%

• Resource transfer: Tax devolution be the primary route resource transfer to states

• NITI connect: The govt has accepted the recommendations in view of the spirit of the National Institution for Transforming India (NITI)

• Grants: Should be distributed to states for local bodies on the basis of the 2011 population data; the grants be divided into two broad categories on the basis of rural and urban population — constituting gram panchayats, and constituting municipal bodies

• Types of grants: A basic grant and a performance grant — the ratio of basic to performance grant be 90:10, with respect to panchayats; and 80:20 in the case of municipalities

• Total grants: Rs 2,87,436 crore for a five-year period from April 1, 2015, to March 31, 2020; of this, Rs 2,00,292.20 crore to be given to panchayats and Rs 87,143.80 crore to municipalities

• Grant transfers: For 2015-16, transfers will be to the tune of Rs 29,988 crore

• Disaster relief: The percentage share of states to continue as before and follow the current mechanism — to the tune of Rs 55,097 crore. After implementation of GST, disaster relief will be given according to the recommendations of the Finance Commission

• Post-devolution revenue deficit grants: A total of Rs 1,94,821 crore on account of expenditure requirements of states, tax devolution and revenue mobilisation capacity of the states. These will be given to 11 states

• Delinking of schemes: Eight centrally sponsored schemes (CSSes) will be delinked from support from the Centre; warious CSSes will now see a change in sharing pattern, with states sharing a higher fiscal responsibility

• Cooperative federalism: There are recommendations on cooperative federalism, GST, fiscal consolidation road map, pricing of public utilities and PSUs, too