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Issues before the Fourteenth Finance Commission
This article poses four questions which will need to be addressed by the recently-constituted Fourteenth Finance Commission. Given an expansive terms of reference, should the commission confi ne itself to its constitutional mandate? Second, should the commission seek to develop incentive frameworks which will carry credibility with future commissions? Third, should the commission encourage better fiscal performance in the states more explicitly? Fourth, should the commission provide fiscal headroom in its projections for accommodating unanticipated developments?
The author is grateful to V L Kelkar, Sumit Bose and an anonymous referee for insightful comments. The author thanks participants of the national seminar on “Centre-State Relations in Indian Fiscal Context” held at the Centre for Economic & Social Studies, Hyderabad on 5 November 2012 for their comments on a preliminary version of this article. The author also thanks P Srinivasa Subrahmanyam (OSD), Finance Department, Government of Andhra Pradesh for research assistance. The usual disclaimers apply.
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