Fifteenth Finance Commission Recommendations

Six Hindi-belt states—Uttar Pra­desh (UP), Madhya Pradesh, Bihar, Jharkhand, Rajasthan, and Chhattisgarh, which together account for 42.85% of India’s population as per the 2011 Census—would be getting 48.57% of the sharable pool of the union government taxes during 2021–26, as per the recommendations of the Fifteenth Finance Commission. The five southern states—Tamil Nadu (TN), Karnataka, Kerala, Andhra Pradesh, and Telangana—with a population share of 21.32% will get 15.8% of the sharable taxes, while the seven western, eastern, and northern states, which contribute 30.61% of the population would get 25.31%. The eight north-eastern states and two Himalayan states (Uttarakhand and Him­achal Pradesh)—the earlier special category states sans Jammu and Kashmir (J&K), which no longer is a state—accounting for only 5.32% of population would get 10.48% of the tax transfers. This, in a nutshell, is the summary of the recommendations of the Fifteenth Finance Commission whose report was laid on the table of Parliament along with the 2021–22 budget papers, but was somehow eclipsed in the media by the exaltation in the stock market produced by the finance minister’s no-tax budget.

The final report of the Fifteenth Fin­an­ce Commission is aptly titled “Finance Commission in COVID Times—Report for 2021–26.” App­ointed in 2018 for giving recommendations covering the period 2020–25, the commission’s term was extended by one year in November 2019 after the bifurcation of the state of J&K in August 2019. The commission, therefore, gave an interim report for 2020–21 in February 2021 to enable dev­olution of taxes and grants to the states for that year. The final report was submitted in November 2020. Only once ­before in the history of the finance commissions, the Ninth Finance Commission had submitted two reports.