Government accepts 14th Finance Commission Report

Date: February 25, 2015

Finance commission 14th finance commission

 14th Finance Commission Report accepted for 2015-16 to 2019-20


The Central government accepted recommendations of the 14th Finance Commission (FC) as per its agenda to treat the states as partners in long-term development in a spirit of cooperative federalism. The  recommendations of 14th finance commissionare for the five-year period 2015-16 to 2019-20.

Major recommendations of the 14th Finance Commission-

1- Devolution to states: States’ share in net proceeds from tax will be 42%. It is a big hike from 32% which was  recommend by the 13th Finance Commission. It is also the largest growth as compared to previous hikes. The share of States in the Centre’s net tax receipts will go up by Rs. 1,78,000 crore in 2015-2016.

2- Grants for local bodies: Should be distributed to states for local bodies on the basis of the 2011 population data; the grants be divided into two broad categories on the basis of rural and urban population — constituting gram panchayats, and constituting municipal bodies

3- Types of grants: A basic grant and

                                 performance grant

The ratio of basic to performance grant be 90:10, with respect to panchayats; and 80:20 in the case of municipalities.Total grants: Rs 2,87,436 crore for a five-year period from April 1, 2015, to March 31, 2020; of this, Rs 2,00,292.20 crore to be given to panchayats and Rs 87,143.80 crore to municipalities

The Finance Commission also has identified 11 revenue deficit states and granted them Rs 48,906 crore as additional resources for the year 2015-16.

 The 14th Finance Commission was constituted in January 2014. Commissions chairman was former RBI governor Y V Reddy and its members were Sushma Nath, M. Govinda Rao, Abhijit Sen, Sudipto Mundle.


Additional Information-

Constitutional provisions regarding distribution of Revenues between the Union and the States


268.    Duties levied by the Union but collected and appropriated by the States.
269.    Taxes levied and collected by the Union but assigned to the States.
270.    Taxes levied and collected by the Union and distributed between the Union and the States.
271.     Surcharge on certain duties and taxes for purposes of the Union.
274.     Prior recommendation of President required to Bills affecting taxation in which States are interested.
275.     Grants from the Union to certain States.
280.     Finance Commission.
281.     Recommendations of the Finance Commission.

282.     Expenditure defrayable by the Union or a State out of its revenues.