The 16th Finance Commission backs 41% vertical devolution but reshapes horizontal criteria by adding States’ GDP contribution, balancing equity with performance. It proposes fiscal discipline through curbing off-budget borrowings, subsidy sunset clauses, and power reforms, while flagging cesses and surcharges as a key challenge to cooperative federalism.
Click to View MoreFiscal federalism in India is strained by shrinking state autonomy, centralization of revenues under GST, and rising cesses that narrow the divisible pool. To restore balance, the 16th Finance Commission must expand untied transfers, streamline CSS, and rebuild fiscal trust for equitable regional development.
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