16th Finance Commission's political challenge

There are fundamental issues to harmonious inter-governmental fiscal relations that the Centre must take into account when constituting the Commission

The Sixteenth Finance Commission will shortly be appointed and receive its terms of reference (ToR) from the Government of India (GoI). “Sixteenth” suggests a chronologically stable process, but the reality is quite the opposite. The current juncture in intergovernmental fiscal relations in India is vitiated by political and institutional contestation and emergent structural trends that make business as usual untenable. 

The Fourteenth Finance Commission report significantly increased the devolution of funds to states and abolished most grants. This was accepted by the Centre, which then sought to promote cooperative federalism. Over time, this has reversed. The abolition of the Planning Commission