Universal Coaching Centre -

Enter your keyword

8053+ OFFICERS SERVING THE NATION UNIVERSAL COACHING CENTRE Let's join hands together in bringing Your Name in Elite officers list. JOIN US 25 YEARS OF EXCELLENCE MEET NEW FRIENDS AND STUDY WITH EXPERTS JOIN US Nothing is better than having friends study together. Each student can learn from others through by teamwork building and playing interesting games. Following instruction of experts, you and friends will gain best scores.

ULP Click here! Click here! Classroom Programme NRA-CET Test Series
Click here ! Org code: XSHWV

post

Centre Defends States’ Tax Devolution Share

Why in the News?

The Union Finance Minister clarified in the Lok Sabha that the Centre has fully transferred 41% of the divisible pool of taxes to States as recommended by the 15th Finance Commission, countering Opposition allegations regarding reduced fiscal devolution. The Minister emphasized that all necessary environmental clearances and environmental impact assessments were obtained for infrastructure projects, adhering to the Forest Conservation Act and the EIA notification.

Government’s Clarification on Tax Devolution:

  • The Union Finance Minister asserted that the Centre has consistently transferred 41% of the divisible pool to States, as mandated by the 15th Finance Commission (2020–26), ensuring compliance with environmental regulations and the polluter pays principle.
  • Allegations that the Centre reduced States’ share were rejected, with assurance that no State’s devolvable tax share was curtailed. The government is committed to a pollution-free environment and sustainable development.
  • The 16th Finance Commission reviewed transfers from 2018–19 to 2022–23 and confirmed that devolution matched the Commission’s recommendations annually, including ex post facto environmental clearances for infrastructure projects where required.
  • Total estimated transfers to States for 2026–27 stand at ₹25.44 lakh crore, including tax devolution and allocations under Centrally Sponsored Schemes (CSS), reflecting enhanced fiscal support while adhering to the precautionary principle in environmental matters.
  • This marks an increase of ₹2.7 lakh crore over 2025–26 and ₹3.78 lakh crore higher than 2024–25 actuals, reflecting enhanced fiscal support and commitment to sustainable infrastructure development.

Medium-Term Fiscal Vision and Infrastructure Push

  • The Budget is positioned as the first in the second quarter of the 21st century, outlining fiscal priorities from 2026 to 2050, with a focus on environmental sustainability and compliance with environmental regulations.
  • It coincides with the beginning of a new cycle under the 16th Finance Commission, shaping medium-term fiscal projections while considering environmental impact assessments for infrastructure projects.
  • The government emphasizes sustained investment in infrastructure development to drive growth, with a commitment to obtaining necessary environmental clearances and adhering to the Forest Conservation Act.
  • Focus areas include roads, National Highways, and inland waterways to reduce logistics costs, with due consideration for coastal regulation zones and environmental impact assessments.
  • Special attention is being given to hinterland States, aiming to enhance connectivity, competitiveness, and regional balance while ensuring compliance with environmental regulations and the polluter pays principle.

Understanding Divisible Pool, Cesses and Constitutional Provisions:

  • The Divisible Pool refers to the portion of net tax proceeds shared between Centre and States under Article 270 of the Constitution.
  • The Comptroller and Auditor-General (CAG) determines the net proceeds after deducting cesses and surcharges from gross tax revenue.
  • Cesses and surcharges, authorized under Article 271, are not shareable with States and are levied for specific purposes like health, education, infrastructure, and environmental protection.
  • Opposition criticism centres on the argument that higher reliance on cesses shrinks the divisible pool, reducing States’ effective share.
  • The Centre maintains that these levies ultimately benefit States through targeted expenditure such as schools, hospitals, roads, and environmental conservation initiatives, adhering to the principles of environmental democracy and environmental jurisprudence.