States will receive higher share of 32 per cent of central tax proceeds from the next fiscal as against 30.5 per cent following the government's acceptance of the 13th Finance Commission's recommendation in this regard.
"Government of India, despite the strains, has accepted recommendations of the Finance Commission," Finance Minister Pranab Mukherjee told reporters here after the 13th Finance Commission report was tabled in Parliament today.
The government finances have been under pressure with fiscal deficit of the Centre rising to 6.2 per cent of the GDP during 2008-09 on account of stimulus measures. For 2009-10, it is projected at 6.8 per cent of the GDP.
"The share of states in net proceeds of shareable Central taxes shall be 32 per cent every year for the period of the award (2010-11 to 2014-15)," said the Commission, headed by former finance secretary Vijay Kelkar.
In the Budget for 2009-10, when the states' share in the central tax pool was 30.5 per cent, it was estimated Rs 1,64,361 crore.
Basing its opinion on revenue-raising capacity of the Centre and states, and emerging pressures on their expenditure commitments, the Commission said the centre's revenue buoyancy will continue to remain higher than that of states.