15th Finance Commission likely to cut devolution to states marginally

15th FC may also sequester Centre's defence, internal security capex from divisible pool

In what may come as a fiscal relief for the Centre, the Fifteenth Finance Commission (15th FC) may recommend a marginal cut in the states’ share of tax devolution, from the current 42 per cent, Business Standard has learnt.

In addition, the capital expenditure (capex) components of the Centre’s allocation for defence and internal security could be sequestered from its overall tax revenues. 

The new devolution formula could thus be applied to the Centre’s tax revenues after deducting from them its capex on defence and internal security. 

Both the contemplated moves would result in lower transfers to the states, which