Balancing Intergenerational and Intragenerational Equity in India’s Tax Devolution Formula

This article argues that the Finance Commission (FC) should prioritize intergenerational fiscal equity by incorporating fiscal indicators into the tax devolution formula. This approach would incentivize States to manage their finances sustainably and ensure that future generations are not burdened with debt. The article highlights the current system’s shortcomings, where high-income States are disproportionately burdened while low-income States rely heavily on Union financial transfers.

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