01691nam a22001337a 4500 533717 533717 260612b ||||| |||| 00| 0 eng d Pradeep, Kamble 61219 Implications of the Sixteenth Finance Commission on state finances Economic & Political Weekly 61(19), May 9, 2026: p.59-66 The fiscal implications of the Sixteenth Finance Commission’s transfers on state governments are examined. The Sixteenth Finance Commission introduces significant changes in the inter se distribution among the states compared to the Fifteenth Finance Com¬mission. The paper analyses the implications of these changes for states’ revenue deficits, their ability to meet the Fiscal Responsibility and Budget Management Act targets, and capital expenditure. It also assesses the extent of fiscal adjustment in states, the fiscal behaviour required to sustain adquate capital expenditure and the feasibility of such adjustments. The analysis suggests that, owing to enhanced transfers recommended by the Sixteenth Finance Commission, a few high-income states are likely to generate substantial revenue surpluses, whereas many middle-income and north-eastern and hilly states may experience revenue deficits. Consequently, middle-income and NEH states are likely to face difficulties in maintaining adequate capital expenditure and comply with FRBM targets, with some requiring corrective changes in fiscal behaviour and additional federal fiscal transfers.- Reproduced https://www.epw.in/journal/sixteenth-finance-commission/implications-sixteenth-finance-commission-state.html Economic & Political Weekly AR 0 0 ddc 0 0 408896 IIPA IIPA 2026-06-12 61(19), May 9, 2026: p.59-66 AR139189 2026-06-12 AR