Modi Accepts Finance Commission's Record Hike In States' Share

The total grant to the local bodies including panchayats and municipalities for the five-year period ending March 31, 2020 works out to 288,000 crore.

The commission, headed by former Reserve Bank of India governor Y.V. Reddy, had a dissenting note from part-time member Abhijit Sen, who recommended devolution of 38 percent of the divisible pool in the first year.

The huge hike over the current 32 percent is a little short of the states' demand for a 50 percent share.

This is also the largest increase in tax devolution since the 7th Finance Commission doubled the states' share of excise duties from 20 percent to 40 percent in the 1980s.

The Commission has also asked the Centre to ensure that prevailing levels of transfers to states remain at around 49 percent of gross revenue receipts.

The total transfer was 39.5 percent in the case of the 13th Finance Commission.

Meanwhile, the prime minister tweeted: "In my letter to CMs, wrote about the Centre accepting recommendations of 14th Finance Commission, which will strengthen our federal spirit."

"Never before has there been a 10 percent increase in devolution of divisible pool of resources to the states. This is unprecedented & historic," he added.
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