Archive · 22 May 2025
States Advocate for Revenue Sharing Formula Changes with Centre
Imagine the Indian government collects money like a big piggy bank.
This article talks about how this money is shared between the Central government (the top boss) and the different states (like your local towns).
The states are saying they want a different way of sharing the money, because they think the current way isn't fair.
A group called the Finance Commission helps decide how to split the money.
They are currently working on figuring out the new rules for the next five years to make sure everyone gets a fair share.
The article explains these complex financial ideas so everyone can understand them, like how a small amount of money is divided.
Almost all Indian states are advocating for a change in the current revenue-sharing formula.
The article explains the complexities of fiscal federalism and revenue sharing.
The series simplifies fiscal federalism using a ₹100 note to illustrate fund sharing.
The Fifteenth Finance Commission recommended that 41% of the divisible pool be allocated to States.
The Sixteenth Finance Commission is determining the new revenue-sharing formula for the next five years.
- Who
- Indian states and the Central government
- What
- States are calling for a change in revenue-sharing formula with the Central government.
- When
- As of May 22, 2025
- Where
- India
- Why
- States seek a change in revenue-sharing formula with the Centre, viewing the current system as inequitable.
States
Central Government
Revenue Sharing Formula
States
The States view the existing formula as inequitable.
Central Government
The Centre's current formula is viewed as equitable.
- Participants
- States in India
- Current Activity
- Determining the new revenue-sharing formula for the next five years.
- Finance Commission Recommendation
- 41%
- Commission
- Sixteenth Finance Commission