Some PerspectiveAnalysis

Federalism

Fiscal centralisation is at its highest in the modern era

The Fiscal Centralisation Index (FCI) is the mean of six normalised components: cess share, devolution shortfall, conditional transfers, states' own-tax revenue, conditional borrowing, and the structural one — GST, which in 2017 stripped states of independent indirect taxation. On a relative 0-1 scale, FCI rose from 0.19 (2014) to 0.68 (2026), peaking at 0.92 in 2020; UPA-era values averaged ~0.09.

GST plus cesses mean states retain less of the divisible pool than at any point since the 14th Finance Commission framework.

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About this reading

This is one of 36 standing analyses drawn from the Some Perspective dataset. It is not dated commentary: it describes a relationship in the data that holds across the series, and it is regenerated whenever the underlying dataset is refreshed. The figures quoted here reflect the 2026-08-15 data vintage.

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Raman, V.S. Some Perspective: India's Economic Transformation. someperspective.info · CC BY 4.0 · data vintage 2026-08-15. Cite & download · All analyses