States’ Revised Shares
The 15th Finance Commission (FC) has slightly modified the formula for distributing states’ share of central taxes — the largest component of transfers to states.
Top Tax Collectors
When it comes to generating tax revenue, the most populous states are not on top, meaning smaller southern states have to subsidise the larger but less productive northern states
Population & Devolution
FC’s new tax revenue devolution formula relies a lot on states’ population.
A big issue affecting the finances of states is revenue crunch. With GST, loan waivers and income support schemes, most states are cashstrapped, forcing them to borrow more.