15th Finance Commission may hike grants, cut devolution to states

Performance-based incentives planned to reduce friction between Centre, states

The Fifteenth Finance Commission (15th FC), in its report for 2020-21, is believed to have reduced the devolution to states from the existing 42 per cent of the divisible tax pool, giving the revenue-strapped Centre some breathing space.

However, the Commission has increased the tied funds, such as grants related to revenue deficit and disaster relief, and is bringing back performance-based incentives, Business Standard has learnt.

Any reduction in devolution could aggravate the strained relations between the Centre and some opposition-ruled states on a number of issues, including the Citize-nship Amendment Act. 

The 15th FC, headed by NK Singh, submitted its first report