As far as the vertical distribution (share between centre and states) is concerned, the decision of the 14th FC to increase states’ share to 42% was wrong. The fact that funds that were earlier given to centrally-sponsored schemes were directly transferred to states was not adequately appreciated. The 15th FC has been asked to take a call on the continuation of revenue deficit grants. The 15th FC should stop financing the states’ revenue deficit per se, and find some ingenious solution to do this if it’s a constitutional requirement. Special issues of states should be addressed on a case-by-case basis to provide grants as relief to states, but not confined to, or indeed ignoring, revenue deficit considerations.

Source: Mint May 06, 2018 16:18 UTC