NINTH FINANCE COMMISSION S AWARD III-Flawed Devolution Scheme

examination of the Ninth Finance Commission's (NFC) scheme of transfers to the 14 major (i e, non-special category) states to meet the deficits in their non-plan and plan revenue accounts during 1990-95. We concentrate on the logic of the scheme with particular reference to the allocation of plan deficit grants. We show that the pattern of this allocation, inter se among the states, is irrational and inequitable within the framework of the NFC's own procedures and assumptions and within the constraint of the sum available to finance these deficits. We also indicate two alternatives which would have resulted in rational and equitable solutions.