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Do states still pay the price for performance?

By: Shanmugam, K. R.
Material type: materialTypeLabelBookPublisher: Economic & Political Weekly Description: 61(19), May 9, 2026: p.72-78. In: Economic & Political WeeklySummary: As the devolution shares of better-performing states declined sharply over time, there were expectations of a decisive shift towards efficiency-oriented criteria to strengthen fiscal federalism and enhance state autonomy. However, the Sixteenth Finance Commission largely followed the approach of its predecessor, introducing only incremental changes in the distribution formula. Although it signalled a conceptual shift by acknowledging states’ contribution to gross domestic product, the adoption of a square root transformation substantially diluted the practical impact of this recognition. – Reproduced https://www.epw.in/journal/sixteenth-finance-commission/do-states-still-pay-price-performance.html
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Articles Articles Indian Institute of Public Administration
61(19), May 9, 2026: p.72-78 Available AR139191

As the devolution shares of better-performing states declined sharply over time, there were expectations of a decisive shift towards efficiency-oriented criteria to strengthen fiscal federalism and enhance state autonomy. However, the Sixteenth Finance Commission largely followed the approach of its predecessor, introducing only incremental changes in the distribution formula. Although it signalled a conceptual shift by acknowledging states’ contribution to gross domestic product, the adoption of a square root transformation substantially diluted the practical impact of this recognition. – Reproduced

https://www.epw.in/journal/sixteenth-finance-commission/do-states-still-pay-price-performance.html

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