Quick Summary
Amid growing concerns from southern states over the perceived unfair distribution of tax revenues, Finance Minister Nirmala Sitharaman has emphasized that it is the Finance Commission, not the central government, that determines the devolution of taxes. She urged the aggrieved states to directly engage with the 16th Finance Commission, whose recommendations will shape the distribution of funds for the next five years. Southern States' Concerns Over Population-Based Devolution The core of the
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FAQ :
Southern states are concerned that their success in controlling population growth has led to a reduced share of tax revenues, as devolution criteria often use population-based data.
The Finance Commission, not the central government, determines the devolution of taxes based on its recommendations.
The share of southern states in tax devolution has declined, from 18.62% in 2014-15 to 15.8% for the period 2021-22 to 2024-25.
The 15th Finance Commission shifted to using the 2011 Census data for population weightage, whereas previous commissions used the 1971 Census data.
She has urged the states to directly engage with and present their concerns and unique circumstances to the 16th Finance Commission.
The 16th Finance Commission is expected to submit its report by October 31, 2025.
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