As per the increased devolution suggested in the report of the 14th Finance Commission, the states will get Rs 3.48 lakh crore in 2014-15 and Rs 5.26 lakh crore in 2015-16.
"The higher tax devolution will allow states greater autonomy in financing and designing of schemes as per their needs and requirements," the Finance Commission report said.
READ ALSO: States should get 42% of central taxes, Finance Commission report says
The Modi government said that that it has taken the recommendations of the 14th Finance Commission in a positive spirit, although it puts a tremendous strain on the Centre's finances.
The Modi government said that recommendations of Finance Commission will strengthen federalism. Here are some key messages of 14th Finance Commission :
*The Union government said it is committed to strengthening the federal polity and promoting cooperative federalism.
*Federal governance is the only vehicle to achieve rapid development.
*Strong states are the foundation of a strong India. The progress of the country depends on the progress of states.
*The government is committed to empowering states in all possible ways.
*States should be allowed to chalk out their programmes and schemes with greater financial strength and autonomy, while observing financial prudence and discipline.
*Without this, local development needs cannot be met and marginalised communities and backward regions cannot be brought into the mainstream.
*The Planning Commission was replaced with the NITI Aayog with the explicit intent of ensuring that it becomes a common forum for forging a national vision on development.
*The 14th FC has recommended a record increase of 10% in the devolution of the divisible pool of resources to states. This compares with the marginal increases made by previous Finance Commissions.
*The total devolution to states in 2015-16 will be significantly higher than in 2014-15.
*The 14th FC has made a fundamental shift in the pattern of financing revenue expenditures.
*It has assumed all central assistance to State Plan Revenue expenditure to be part of the states's revenue burden and determined devolution on this basis.
*The dominant view of states too has been that a majority of the resources should flow as tax devolution and the number of CSS should be reduced.
*Therefore, there is a shift from scheme and grant based support from the Central Government to a devolution based support. Hence, the devolution of 42% of divisible resources.
*This leaves far less money with the central government.
*As per the 14th FC, all State Plan Revenue expenditure has to be met from the resources being devolved to states.
*In spite of this large devolution, the Centre has decided to continue with support to topmost areas of national priority such as poverty elimination, MNREGA, education, health, rural development, agriculture and a few other areas.
*Following the acceptance of the 14th FC recommendations, the government said it is moving away from a "One size fits all" approach.
*Accepting these long standing concerns and long-felt lacunae in the country's planning process, the government has decided to devolve maximum money to states and allow them the required freedom to plan the course of states' development.
*The additional 10% of resources being devolved gives this freedom.
*In this overall context, states are flush with resources.
*States are free to continue or change these schemes and programmes as per their discretion and requirement.
*The Union government, particularly the NITI Aayog, will support states in developing a strategy and help in execution through ideas, knowledge and technology.
*The government has decided to involve states in discussing and planning national priorities. This is being done so as to maximise the outcome from every rupee spent.
*It is with this spirit of Team India that all CMs have been made equal partners in the governing council of NITI Aayog, the government said.
*This is co-operative federalism which is real and true federalism.
*The government said that it is happy that resources are going to the right place.
*Resources are going to states to ensure that poverty is eliminated, jobs are created; houses, drinking water, roads, schools, hospitals and electricity are provided.
*The government said that resources are not and will not be a problem.
*The focus should be the poor, farmers and common men and women, the youth and children.
*The challenge is to address the factors which inhibit the realisation of their full potential.
*This is a golden opportunity in our nation's economic development process.
*This is not an opportunity for the central government, but an opportunity for India as a whole.
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