The Sixteenth Finance Commission this week submitted its report to the government. The report has not yet been made public, although it is expected to be tabled in Parliament during the Budget session next year. The Finance Commission’s recommendations will cover five years beginning April 1, 2026. They will shape the distribution of tax revenues between the Union and the states, along with the allocation of funds among the states under various categories. In this regard, it is worth noting that several southern states have raised concerns over their declining share. As a recent analysis in this newspaper
Thursday, December 11, 2025 | 11:59 AM ISTहिंदी में पढें
Bridging the gap: Lagging states need a growth push amid rising debt
While the concerns of the southern states are understandable, in a federal structure it will always be expected that the lagging states are supported to ensure more equitable development
 "As the 16th Finance Commission, headed by Arvind Panagariya, takes feedback from stakeholders, some states have complained to it that the Centre is increasingly taking recourse to cess and surcharge to circumvent its recommendations on tax devolution")
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In the context of state finances, there is another challenge that the Union and the states concerned will have to deal with. Some states have very high levels of debt, which can affect growth prospects. (Illustration: Binay Sinha)
