Finance Commission’s interim report may raise the topic of devolution

The 15th Finance Commission’s interim report might be tabled in Parliament on February 1, according to media reports.

If the Finance Commission’s report is tabled, states will most likely bring up the topic of “devolution” since they have been seeking a larger share of the Centre’s divisible tax pool.

States currently receive 42 percent of the Centre’s divisible tax pool, as was proposed by the 14th Finance Commission.

The interim report is expected to keep the devolution at 42 percent for FY21, News18 reported.

States wold be unhappy if their share of the the Consolidated Fund of India (CFI) is lowered since they are already struggling with revenue deficit and delays in payout of goods and services tax (GST) compensation payout.

Thomas Isaac, the finance minister of Kerala, recently said he hopes that the 15th Finance Commission will not lower the existing 42 percent devolution.

“It cannot be reduced, it is politically damaging. So therefore, they are trying it the other way around. Reduce the divisible pool itself…. That is the centre’s problem,” Isaac said, as quoted by BloombergQuint.

Telangana  Finance Minister T Harish Rao has asked the Finance Commission to increase the devolution to states.