The Sixteenth Finance Commission noted the Centre’s concern about the reduction in its fiscal space. In the end, however, the Sixteenth Finance Commission retained the States’ share at 41%, imparting to it a kind of semi-permanence. In the Fifteenth Finance Commission period, covering the years 2020-21 to 2024-25, this share came down marginally to 34.4%, still considerably higher than those of the Eleventh and Thirteenth Finance Commission periods. Horizontal dimensionThe Sixteenth Finance Commission introduced a new criterion of contribution to reflect an efficiency consideration. Losses and gainsConsequently, the main States that have lost on account of the Sixteenth Finance Commission devolution scheme as compared to the Fifteenth Finance Commission are Madhya Pradesh, Uttar Pradesh, West Bengal, Bihar, Odisha, Chhattisgarh and Rajasthan.

Source: The Hindu March 02, 2026 08:52 UTC