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Shifting dynamics of state finances

Business Standard

February 27, 2026

The 16" Finance Commission throws up a transition challenge for states facing strict fiscal limits

R Kavita Rao

With every new Finance Commission’s award period coming into effect, there are subtle changes in the resource positions of the states.

Some Commissions have increased the share of states in vertical devolution. Most have recommended changes in the formula for horizontal devolution, implying an increase in the share of some states and a decline for others, depending on the variables chosen and the weightings assigned. The report of the Sixteenth Finance Commission has left the vertical devolution unchanged while revising the formula for horizontal devolution. Clearly, there are both gainers and losers. Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala and Punjab emerge as the gainers, with an increase in their share. On the other hand, Arunachal Pradesh, Madhya Pradesh, Uttar Pradesh and West Bengal have seen a reduction in their share.

このストーリーは、Business Standard の February 27, 2026 版からのものです。

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