Increase in share of tax revenue: The Commission recommended an increase in the share of tax revenue to states from 32% to 42%. This provided the states with greater financial autonomy and allowed them to have more control over their fiscal resources. The increased revenue share also allowed the states to undertake development activities and address their fiscal deficits.
Greater flexibility in allocation: The Commission recommended greater flexibility in the allocation of funds to the states. This meant that the states were free to use the funds as per their priorities, which helped in promoting fiscal discipline and accountability.
Performance-based grants: The Commission introduced performance-based grants to incentivize the states to implement reforms in areas such as power sector, urban local bodies, and ease of doing business. This helped the states to focus on implementing reforms and improving their fiscal position.
Focus on social sector spending: The Commission recommended that the states allocate more funds towards the social sector, particularly health and education. This helped in improving the quality of services in these sectors, which in turn improved the overall human development indicators of the states.
Overall, the recommendations of the 14th Finance Commission have helped in strengthening the fiscal position of the states and provided them with greater autonomy in managing their finances. The increased revenue share, greater flexibility in allocation, and focus on performance-based grants and social sector spending have all contributed to improving the fiscal position of the states.
By-Omnath Dubey
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