The NK Singh-led 15th Finance Commission has recommended reducing states share by 1% from Centre’s divisible pool to 41% in 2020-21 as against 42%, citing reasons of security and special needs of the union territories of J&K and Ladakh.

While there is no change in the formula of devolution, the 1% reduction has been on account of J&K moving out from the state list. The 14 ^th Finance Commission had modelled for 29 states and had recommended 42% of the Centre’s pool to be devolved to states.

The FC has notionally estimated the share of erstwhile state of Jammu & Kashmir to be around 0.85 of the divisible pool. “We believe that there is a strong case for enhancing this to 1% of the divisible pool in order to meet the security and other special needs of the UTs of J&K and Ladakh,” it said.

“Since this enhancement has to be met from the Union Government’s resources, we recommend that aggregate share of states may be reduced by 1 percentage point to 41% of the divisible pool,” it added.

Fiannce minister Nirmala Sitharaman tabled The 15 ^th FC report in Parliament on Saturday, ahead of the General Budget. The commission will submit its report for an extended period of 2021-22 to 2025-26 by October 30, 2020. The Cabinet has approved extension of the term of 15 ^th Finance Commission following abrogation of Article 370 after which J&K became a union territory and thus number of states were remodelled from 29 earlier to 28 now.