Statsguru: Holding a fine balance between 11th and 14th Finance Commission

The Commission had recommended that states' share in divisible tax pool be raised to 42% between 2015 and 2020

The 14th Finance Commission, under the chairmanship of Y V Reddy, had ushered in a monumental change in the fiscal architecture of the country.

The Commission had recommended that the states’ share in the divisible tax pool be raised to 42 per cent between 2015 and 2020, up from 32 per cent during 2010-15 as proposed by the 13th Finance Commission (Chart 1).

This increase in the share of untied funds meant that state governments had greater flexibility to decide on their expenditure priorities. But it also meant that central government funding for certain schemes would