Once bitten, twice shy: Why states doubt centre will share taxes fairly

States are understandably wary even after getting half the Centre's gross tax revenue in the first quarter of 2020-21

The Union government’s gross tax revenue collections in the first quarter of 2020-21 fell to Rs 2.7 trillion, a decline of over 32 per cent over the same period of 2019-20. However, the Centre’s net tax revenue collections in the same period this year fell by a sharply higher margin of over 46 per cent to Rs 1.35 trillion. This divergence is not usual.

The difference between the Centre’s gross tax revenue and net tax revenue is largely accounted for by transfer to the states, as mandated by the Finance Commission. But the extent of fall in the net tax