Finance commission road map

This year, the Fifteenth Finance Commission will be constituted

This year, the Fifteenth Finance Commission (FC) will be constituted. Article 280 of the Constitution mandates the commission to decide how taxes that form part of the “divisible pool” are to be distributed a) between the Centre and the states, and b) between the states. The divisible pool consists of the bulk of taxes collected in India i.e., income taxes, the goods and services tax (GST) and, customs duty. 

As economic advisor to the Thirteenth Finance Commission, I was able to closely view the deliberations on these matters. The vertical devolution between the Centre and the states is necessarily determined iteratively,