News on Medial

Finance Commission can create more fiscal space for states through grants

Money ControlMoney Control · 2m
Finance Commission can create more fiscal space for states through grants

- The declining share of Finance Commission (FC) grants to states is a pressing issue in India's fiscal federal landscape. - The share of FC grants in total central transfers to states has dropped from 6 percent to 3.6 percent over a decade. - This decline in FC grant's share has implications for state finances and leads to fiscal contention between the Union and state governments. - The existing transfer mechanism has a mismatch between expenditure responsibilities and resource generation capacity. - The increasing share of conditional grants poses a threat to fiscal federal landscapes and limits states' autonomy. - There is a need to increase the base of FC grants and advocate for a greater share of unconditional grants relative to conditional allocations to enhance states' autonomy and cater to their specific development needs.

Comments

Download the medial app to read full posts, comements and news.