14th FC

Centre has devolved 42% of Central revenues to the states, 5% to urban local bodies, 2% for natural calamities.
A long overdue state autonomy and increased federalism is on the cards now. The FFC recommendation to increase the unconditional transfers of funds by a huge 10% is welcome. At last wishes of the states and government’s emphasis on cooperative federalism seem to embark on a new mission but they need to be evaluated. There is a concern that more devolution will leave less for the centre to manage its FD. This may be true explicitly, but indirectly it has been said that it manages the budgets much more efficiently. The top down approach was inefficient for the local variety. Discretionary planning and localized implementation will increase the efficiency in managing and building capital assets much more efficiently, as it significantly reduces the loop sizes for monitoring and evaluation and gives shorter communication systems with lower hierarchies.
Concerns regarding states mishandling funds, have a danger, which the centre has to manage. A cooperative with a competitive federalism can be an option. Already winds have been blowing about it. States are eager to botch up the GDP numbers and investments. A state wise ranking on HDI and business ease index and alike can push them towards rationalized policies.
Apart from it, an attribute needs to be done which relates to capacity building of states and local governments. Locals are a key. Decentralization should penetrate to the deepest 4th and 5th levels of government. They are the implementing agencies. Till now they are mere hands of state that are tied and bogged down by inefficiencies and corruption. Legislation for mandatory transfers of powers shall be much appreciated and remove the concerns of many.
The reform needs appreciation. but it is just a start and one of many recommendation that are essential for restructuring of government. the acceptance and scale of acceptance of them by the government needs to be looked at in the coming days.
The recommendations of Fourteenth Finance Commission are a right step towards true devolution of more finances and powers to states and local bodies and have the potential to redefine Indian federalism in a long overdue and desirable manner. Critically analyse. (200 Words)
“Effectively, the Fourteenth Finance Commission (FFC) had sowed the seeds of cooperative federalism as states have been accorded unprecedented fiscal freedom.” Do you agree? In the light of recent budgets introduced by many state governments, comment on the statement.