Increase in share of central taxes to states to be reviewed

New Delhi: In what may impact finances of the states, finance commission chairman N.K. Singh said on Friday that the panel will ascertain whether increasing the share of Union taxes to states to 42 per cent, along with rationalisation with Centrally sponsored schemes, has served its purpose. The 15th Finance Commission has been asked to recommend, among other things, a road map for sound management of government finances.

“We will also look at whether the much higher devolution of resources to state governments, raising from 32 per cent to 42 per cent along with the rationalisation of the Centrally-sponsored schemes has served the desired purpose. We will certainly address that issue,” said Mr Singh.

In 2015, the Modi government had accepted 14th Finance Commission recommendations to increase states share in the central taxes by 10 per cent to 42 per cent. Centre had also cut funds for some states schemes so that they can devise their own schemes. The 14th Finance Commission had recommended this as states were demanding that the Centrally-sponsored schemes were straight jacketed and that they should have more freedom and fiscal space.