ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Fiscal Transfers in Pandemic Times

The Fifteenth Finance Commission has trodden carefully in dealing with the controversial terms of reference issued to it in the presidential order. The commission had the challenging task of dividing fiscal resources between the union and the states due to the serious uncertainty posed by the pandemic. In many ways, the recommendations of the commission marks continuity. Devolution of 41% in the divisible pool of taxes to the states, despite the nudging of the centre in the terms of reference to review it and the continuation of revenue deficit grants, are some examples. The phasing out of the revenue deficit grants to the states in the next five years is likely to pose challenges to the fiscally weak states. The conditionalities mandated for availing local body grants may deny the much-needed money for them as the states may not have the incentive to undertake the reforms unless the public pressure builds up. On the whole, the report of the commission is on expected lines; it does not disappoint but all the same, like the previous commissions, it is a work in progress.

Indian Fiscal Federalism at the Crossroads

The abolition of the Planning Commission, the creation of the NITI Aayog, the constitutional amendment to introduce the goods and services tax, the establishment of the goods and services tax council, and the historically high tax devolution to the states based on the Fourteenth Finance Commission have changed the union–state fiscal relations fundamentally. The changing contours of union–state fiscal relations discussed in the context of the release of a recent book Indian Fiscal Federalism by Y V Reddy and G R Reddy are presented here.
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