Co-operative Federalism

              Co-operative Federalism is the spirit and the guiding principle behind the newly created National

Institution for Transforming India (NITI) Aayog.
   
         
               The recommendations of the 14th Finance Commission has been whole-heartedly accepted by the

government though they have a far reaching implications for the central government's budget-making. The

Commission has recommended 42% Central government's tax revenues to the states.  The recommendations

of the finance commissions in the past, ranged from one to two percents. Astonishingly, the giant leap this

year, which gives an enormous share, reduces the fiscal space for the central goernment to a considerable

extent. Subsequentlly, the defence has to compete with other sectors to maintain its share. As per the

roadmap, revenue expenditure is projected to grow by 13.5% in the remaining years of the projected period,

to keep it firm.

               Unlike the 13th Finance Commission which covered both revenue and capital expenditure, the

14th Finance Commission has limited its projection to defence revenue expenditure only, arguing that capital

expenditure is beyond the scope of its assessment.