Will the 16th Finance Commission’s proposal to end revenue deficit grants weaken a fiscal safety net for states?
On the horizontal side, the 16th FC report departs meaningfully from its predecessor. It introduces contribution to GDP as a new criterion, rewarding states for their share in national output. It revises the definition of ‘demographic performance,’ shifting from the (inverse of) total fertility rate to population growth between the 1971 and 2011 Censuses. It removes ‘tax effort’ as a criterion, a change with implications we will return to.
Post Comment