Economy

Centre rejects Finance Commission’s recommendations for special grants to States

Other major recommendations accepted include the 41% share for States out of the divisible pool of tax collections

The Centre has pushed back on the 15th Finance Commission’s recommendation to give special grants worth ₹6,764 crore to States in 2020-21 to ensure that no State receives less than the previous year.

This was one of the few recommendations of the Commission that the Centre did not accept in its action taken report which was tabled in Parliament on Saturday and made public on Sunday.

The Commission had submitted its interim report for 2020-21 to the President on December 5, 2019.

Major recommendations which were accepted by the Centre include the 41% share for States out of the divisible pool of tax collections, the suggested grants-in-aid and post-devolution revenue deficit grants of ₹74,340 crore for 14 States. It also accepted recommendations for grants to local bodies, disaster-related grants and sectoral grants.

However, the Centre asked the Commission to reconsider the recommendation for special grants “as it introduces a new principle.” These grants were suggested to ensure that in 2020-21, “no State receives in absolute terms less than what it received in 2019-20 on account of tax devolution and revenue deficit grants.”

With regard to additional grants for nutrition worth ₹ 7,735 crore, the Centre said it would review the recommendation as part of its overall proposal of measurable performance-based incentives for States.

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Printable version | Feb 28, 2020 3:34:31 PM | https://www.thehindu.com/business/Economy/centre-rejects-finance-commissions-recommendations-for-special-grants-to-states/article30718816.ece

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