How have the recommendations of the 14th Finance Commission of India enabled the states to improve their fiscal position?(Answer in 150 words)

The Fourteenth Finance Commission strengthened state finances by substantially increasing the states’ share of divisible central taxes from 32% to 42% for 2015–20.

Fiscal gains

• Higher untied transfers gave states greater autonomy to align expenditure with local priorities.
• Tax devolution improved predictability and reduced excessive dependence on discretionary grants.
• Revenue-deficit grants supported fiscally weaker states, while grants aided local bodies and disaster management.

Constraints

• Later cesses and surcharges outside the divisible pool reduced the effective gain.
• Weak own-tax mobilisation, committed expenditure and contingent liabilities limited fiscal space.
• Outcome-based budgeting and prudent borrowing remained necessary.

Keywords: constitutional values; governance; public institutions; accountability; inclusive development.