The Chairman also explained that the main job of the Commission was to prepare a proposal for dividing taxes between the central government and the states. “The proposal is then presented to the President of India,” he said.Panagariya mentioned the 15th Finance Commission’s recommendations for horizontal devolution as population 15 per cent, area 15 per cent, forest 10 per cent, tax effort 2.5 per cent, and demographic performance 12.5 per cent.He added that the previous Commission gave the highest weightage of 45 per cent to the income distance criterion. All praise for UP as a well-governed state, Panagriya said that Uttar Pradesh’s tax collection was in proportion to GSDP which was the highest in the country. He also noted that Uttar Pradesh’s fiscal deficit was within normal limits and its debt-to-GDP ratio was also within manageable levels. He further said that in the last Finance Commission, 41 per cent of tax revenue was shared with the states and 59 per cent remained with the central government.
Source link
