The Fourteenth Finance Commission (FFC) will enhance Fiscal Federalism in India: Economic Survey 2014-15

According to the Economic Survey “all States stand to gain from FFC transfers in absolute terms.” The Survey observes that Fourteenth Finance Commission recommendations will enhance cooperative and competitive federalism. 

The biggest gainers in absolute terms under general category states are Uttar Pradesh, West Bengal and Madhya Pradesh. Jammu & Kashmir, Himachal Pradesh and Assam are most benefitted in the Special Category States. 

The Survey says that the FFC recommendations are expected to add substantial spending capacity to the States’ budget. 

The Survey identifies the FFC recommendations as progressive. The states with lower per capita Net State Domestic Product receive larger transfers on average per capita. 

The Survey says that “Balancing the enhanced fiscal autonomy of the states with preserving fiscal space of the Centre entails reduction in Central Assistance to States”. 

The Economic Survey concludes, the FFC’s Recommendations – 

• Will bring about greater fiscal federalism

• Will reduce other Central transfers to states

• Will give greater autonomy to states on revenue and expenditure