New Delhi: The Finance Commission has suggested raising share of states in central taxes to 42 percent from current 32 percent.
As per the increased devolution suggested in the report of the 14th Finance Commission, the states will get Rs 3.48 lakh crore in 2014-15 and Rs 5.26 lakh crore in 2015-16.
"The higher tax devolution will allow states greater autonomy in financing and designing of schemes as per their needs and requirements," the report said.
While Abhijit Sen, part-time member of the Commission headed by Y V Reddy, gave a dissenting note, the government has accepted the majority decision on tax devolution to the states.
Sen, in his note, favoured devolution of 38 percent of the divisible pool in the first year.
After assessing the revenue and expenditure of the states for the period 2015-20, the Commission has recommended a grant of Rs 1.94 crore to meet the deficit of 11 states.
"The consequence of this much greater devolution to the states is that the fiscal space for the centre will reduce in the same proportion," the report said, adding that the dominant view was that the majority of the resources should flow in the form of tax devolution.
