Centre accepts FinComm report; States' share in taxes up 42%

In a bonanza, the 14th Finance Commission has recommended a record 10 per cent increase in the states' share in the Union taxes to 42 per cent, which has been accepted by the Centre and will give the states an additional Rs 1.78 lakh crore in 2015-16.
The report of the Commission, headed by former RBI Governor Y V Reddy, also recommended a grants-in-aid of Rs 48,906 crore for 11 revenue deficit states, including Andhra Pradesh post division, West Bengal and Jammu and Kashmir, for 2015-16. For the period up to 2020, it will be over Rs 1.94 lakh crore.

The total devolution to the states in 2015-16 will be Rs 5.26 lakh crore, as against Rs 3.48 lakh crore in 2014-15, representing an increase of Rs 1.78 lakh crore.
The total devolution to states during the five year period up to 2019-20 will be Rs 39.48 lakh crore.
Addressing a press conference, Finance Minister Arun Jaitley said the Centre has accepted the recommendations of the Finance Commission and it shows NDA government's commitment to cooperative federalism.
In a letter to all Chief Ministers, Prime Minister Narendra Modi said the increased money with states will give them the required freedom to tailor make development schemes to suit their needs.

Besides raising the share of states in the divisible pool of central taxes from 32 per cent previously to 42 per cent, the Finance Commission also provided for Rs 2.87 lakh crore for five year period for Panchayats and Municipalities.
"The higher tax devolution will allow states greater autonomy in financing and designing of schemes as per their needs and requirements," the report said.