ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Whither the States in the Fiscal Arrangement?

The recommendations of the 13th Finance Commission show scant regard for the autonomy of the states.

The recommendations of the Thirteenth Finance Commission (TFC), which the government of India has accepted, cover the well-trodden path of an incremental approach. If there is one defining feature of the package of recommendations it is that it further reduces the autonomy of the states in the union.

The main recommendations of the TFC are an enhancement of the share of the states in tax devolution from 30.5% to 32%, a design for the Goods and Services Tax (GST), a revised road map for fiscal consolidation and the handing out of an unusually large number of specific purpose grants to incentivise the states to carry out certain types of expenditures.

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