Population data of the year 2011 was first introduced in the tax devol

Population data of the year 2011 was first introduced in the tax devolution formula for sharing Union tax revenue with the States by

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Thirteenth Finance Commission

Fifteenth Finance Commission

Fourteenth Finance Commission

Twelfth Finance Commission

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UPSC CAPF – 2024

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The Fourteenth Finance Commission (period 2015-2020) was the first to incorporate the 2011 population census data into its formula for horizontal devolution of central tax revenues among states. Previous Finance Commissions (12th and 13th) primarily used the 1971 population data. The Fifteenth Finance Commission (period 2020-2025) also used the 2011 population data, but included an additional criterion for demographic performance to address concerns of states that had successfully controlled population growth.

Population data is a key determinant in the horizontal devolution formula of the Finance Commission, influencing the distribution of shared taxes among states. The shift to 2011 data by the 14th FC marked a significant change in this methodology.

The rationale for using the 1971 population data for a long period was to avoid penalizing states that had effectively controlled population growth. However, the 2011 data reflects the current demographic reality, leading to adjustments in the shares of states in the divisible pool.

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