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- Under Y.V Reddy
- For the period 2015-20
- Tax devolution: 32% to 42%
- Various Indicators:
- 1. Population 1971 – 17.5%
- 2. Population 2011 – 10%
- 3. Size – for smaller states 2% and general – 15%
- 4. Forest cover – 7.5%
- 5. Income distance (distance from highest earning state) – 50%
- New addition - Forest cover, Population (2011). Removed - Fiscal discipline — Preceding unsigned comment added by Gaurav4291 (talk • contribs) 10:16, 30 June 2016 (UTC)[reply]
Fiscal deficit for state
[edit]- Finance commission recommended 3% fiscal deficit for states with option to relax it to 3.5% in certain circumstances
- States can increase this limit by amending it’s fiscal responsibility and budget management act
- 0.25% can be relaxed for each case
- 1 – if the debt to GSDP ratio of a state was below 25% in the preceding year
- 2 – if interests payments were less than 10% of the revenue receipts in the preceding year
Compensation to states for GST
[edit]- GST compensation fund to be formed
- Revenue compensation to states will be paid for 5 years
- 100% for first 3years, 75% for 4th and 50% for 5th year
Grants to local govt.
[edit]- This grant is given to panchayats and municipalities
- This grant has two parts a basic grant and a performance grant
- Panchayats – 90% basic grant and 10% performance grant
- Municipalities – 80% basic grant and 20% performance grant
Amendments to FRBM act
[edit]- Formation of independent fiscal council to evaluate fiscal policy
- Removing effective revenue (difference between revenue deficit and grants for asset creation)
- FRBM act can be replaced with a debt ceiling and fiscal responsibility act
