Government has accepted the Finance Commission’s recommendations for a substantial hike in share of states in central taxes and asked them to tailor make schemes as per their needs, Prime Minister Narendra Modi said on Tuesday.
In a letter to all Chief Ministers, Modi said the states are free to change Centrally Sponsored Schemes and plan the course of their development.
“The 14th Finance Commission has recommended a record increase of 10 percent in the devolution of the divisible pool of resources to states. This compares with the marginal increases made by previous Finance Commissions,” he wrote.
The states share will now be 42 per cent of the entire kitty as compared to 32 per cent previously.
“The total devolution to states in 2015-16 will be significantly higher than in 2014-15. This naturally leaves far less money with the Central Government,” Modi said according to an official statement issued here.
He said that while the Finance Commission was in favour of all state plans being met through the resources being devolved, the Centre will continue to support national priority projects like poverty elimination, MNREGA, education, health, rural development, agriculture and a few others.
“…When you (states) are flush with resources, I would like you to have a fresh look at some of the erstwhile schemes and programmes supported by the centre. States are free to continue or change these schemes and programmes as per their discretion and requirement,” Modi said.