How have the recommendations of the 14th Finance Commission of India enabled the states to improve their fiscal position? (150 words) [2021]

The recommendations of the 14th Finance Commission of India have enabled the states to improve their fiscal position in several ways:

Increased devolution of funds: The 14th Finance Commission recommended an increase in the devolution of funds from the Union government to the states, from 32% to 42%. This has provided the states with greater financial autonomy and flexibility to address their own development priorities.

Performance-based grants: The Commission also recommended the introduction of performance-based grants, which incentivize states to improve their financial management and service delivery. This has encouraged the states to focus on improving their fiscal performance and efficiency, which has helped to strengthen their financial position.

Reduction in central assistance: In line with the recommendation of the Commission, the Union government has also reduced its central assistance to the states, which has encouraged the states to rely more on their own resources. This has helped to improve the fiscal discipline of the states and make them more financially self-reliant.

Enhanced borrowing limits: The 14th Finance Commission also recommended an increase in the borrowing limits of the states, which has provided them with greater access to credit and helped them to finance their development projects.

Overall, the recommendations of the 14th Finance Commission have played a significant role in enabling the states to improve their fiscal position and address their development priorities more effectively.