Finance Commission's Recommendations and Restructured Fiscal Space

Since it is neither feasible nor desirable to reduce central grants to the states equivalent to the increase in tax devolution, the award of the Fourteenth Finance Commission is certainly not revenue neutral for the union government. But the larger question is not of arithmetic but of a shift in policy towards greater fiscal autonomy to the states by ensuring more than 70% of the fund flow through the Finance Commission route and also preserving the fiscal space for the union for its own functions. It is about getting expenditure priorities right at each level of government.