A Gist of Major Recommendations of Fourth State Finance Commissions and Their Implementation Status

Publication Date01 Jun 2018
AuthorV.N. Alok
Indian Journal of Public
64(2) 254–305
© 2018 IIPA
SAGE Publications
DOI: 10.1177/0019556117751500
1 Associate Professor of Public Finance, Indian Institute of Public Administration, I P Estate, Ring
Road, New Delhi, India.
Corresponding author:
V.N. Alok, Indian Institute of Public Administration, I P Estate, Ring Road, New Delhi 110002, India.
E-mail: vnalok@gmail.com
A Gist of Major
Recommendations of
Fourth State Finance
Commissions and Their
Implementation Status
V.N. Alok1
The process of decentralisation got momentum, with the passage of 73rd and 74th
Constitutional Amendments in 1993, with greater devolution and delegation of
powers to panchayats at various rungs in rural areas and municipalities of differ-
ent levels in urban areas. The state Legislature is responsible to devolve functions,
finances and functionaries to local governments (LGs) enabling them to function
as ‘institutions of self-government’. New fiscal arrangements necessitate every
state under article 243 I and 243 Y to constitute, at regular intervals of 5 years, a
finance commission (SFC) and assign it the task of reviewing the financial posi-
tion of LGs and make recommendations on the sharing and assignments of various
taxes and non-taxes and grants-in-aid to be given to panchayats and municipali-
ties from the consolidated funds of states (Alok, 2008).
Many SFCs, after about 25 years of the amendment, have submitted their
reports to their respective Governors of states. Similar to other government publi-
cations, reports of the SFCs are also difficult to obtain. Attempts have been made
to compile the key recommendations of the first and second generation SFCs
(Alok, 2004) and third SFCs with implementation status (Alok, 2016). In that
order, the present compilation attempts to present the major recommendations of
the fourth SFCs. In addition, actions taken by states on these recommendations
have also been presented along with each recommendation. Despite significant
inter-state variations noticed in the approach and principles adopted by the SFCs,
an attempt has been made here to categorise the major recommendations of SFCs
into the following six categories.
Alok 255
1. Global sharing—Recommendations related to global sharing have found
place in this category.
2. Assignment of revenues—Recommendations regarding taxes fully or
partly assigned to LGs and proceeds of individual tax(es) transferred to
LGs for both panchayats and municipalities are placed in this head.
3. Horizontal distribution—Recommendations regarding inter-se distribu-
tion between panchayats and municipalities and among different levels of
LGs are listed under this heading.
4. Grants-in-aid—Major recommendations regarding specific purpose grants
and general purpose grants to fill the revenue gaps of the LGs are listed
5. Functions and functionaries—Recommendations related to the transfer
of functions to LGs and concomitant powers including functionaries are
mentioned in this category.
6. Others measures—Recommendations which are administrative in nature
and other guidelines for the efficient functioning of the system are listed
under this category.
Though care has been taken, it is difficult to strictly classify the recommendations
as per the above classification. Hence, some overlapping has occurred at few
Status of Fourth State Finance Commissions at a Glance
Sl. No. State Constitution
Submission Award Period
1 Andhra
Constituted (No
data available)
– –
2 Arunachal
Not Constituted
3 Assam Apr-10 Feb-12 – 2011–2016
4 Bihar Jun-07 Jun-10 2010 2010–2011 to
5 Chhattisgarh Not Constituted
6 NCT of
Constituted – –
7 Goa Not Constituted
8 Gujarat Not Constituted
9 Haryana Apr-10 Jun-14 No Data 2011–2012 to
10 Himachal
May-11 Jan-14 Feb-14 2012–2013 to
11 Jammu &
Not Constituted
12 Jharkhand Not Constituted
13 Karnataka Not Constituted
256 Indian Journal of Public Administration 64(2)
Sl. No. State Constitution
Submission Award Period
14 Kerala Sep-09 Jan-11(Part 1) Feb-11 2010–2011 to
(Part 2)
15 Madhya
Jan-12 2010–2011 to
16 Maharashtra Feb-11 2010–2011 to
17 Manipur Not Constituted
18 Meghalaya Exempted under
Article 243 M
19 Mizoram Exempted under
Article 243 M
20 Nagaland Exempted under
Article 243 M
21 Odisha Oct-13 Sep-14 Feb-15 2015–2020
22 Punjab Nov-08 May-11 2011–2012 to
23 Rajasthan Apr-11 Jul-11 Aug-11 2009–2010 to
24 Sikkim Jul-12 2014–2015 to
25 Tamil Nadu Dec-09 Sep-11 May-13 2011–2012 to
26 Tripura Constituted
March 2013/No
data available
27 Uttar
Dec-11 Dec-14 Mar-15 2011–2012 to
28 Uttarakhand Constituted/No
data available
29 West Bengal Apr-13 Apr-14 2013–2014 to

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