Planning Commission scraps Raghuram Rajan index for Central fund distribution

Oct 23 2013, 08:24 IST
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SummaryPanel's move in response to protests made by several states at new ordering of backwardness.

disproportionately higher funds,” said Ahluwalia.

RBI data shows transfer of Central funds to state governments make up about 16 per cent of the total revenue of the latter. From the total tax revenues states get about 32 per cent as per the 13th Finance Commission award.

There are currently four methods through which central assistance to states is handed out. All of these are more than a decade old. The finance commissions come up with its own formula for distribution of tax funds, every fifth year.

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