Govt seeks steep cut in devolution to states from existing 42% of tax pool

Finance Commission has written to ministry for a revised memorandum

The central government, in its memorandum to the Fifteenth Finance Commission (15th FC), has sought a substantial decrease in devolution to states from the existing 42 per cent of the divisible tax pool. The Commission, on its part, has written to the finance ministry, asking for a revised memorandum in the light of the prevailing economic slowdown, tax trends, and the fiscal situation.

 Sources familiar with the developments said while the Centre’s memorandum did not mention any specific percentage of reduction, the devolution to states would go down to 33-34 per cent if its ‘wish list’ was implemented. 

“There is no explicit