Sublime

e traditional mandate of the Finance Commission to allocate revenues across levels of government, but also to put in place and reinforce the structures, habits and building blocks to increase our adaptability as a nation, a Union of States, and a partner in a more sustainable global trajectory for human development.

The distinction between revenue and capital accounts is, in fact, rooted in the history of budget making process, and in the Constitution of India. Revenue deficit grants emanate from the requirement to meet the fiscal needs of the States on their revenue accounts that remain to be met, even after considering their own tax and non-tax resources and

Nobel Prize in economics.

Santiago Levy

The RBI’s report highlights three priorities for states:

1. Control Subsidies: States need to rethink their freebies and focus on sustainable spending.




2. Rationalize Expenditure: Invest more in future development rather than daily operations.




3. Improve Transparency: Standardized reporting and robust data systems are essential.