NEW DELHI, Feb. 1 -- The central government has proposed to retain the states' share in the central government's divisible pool of taxes at 41% for the five-year period starting FY27, in line with the recommendations of the Sixteenth Finance Commission (SFC) chaired by economist Arvind Panagariya.

In her speech for the Union Budget 2026-27, presented on 1 February, finance minister Nirmala Sitharaman told Parliament that the commission submitted its report to the president on 17 November 2025 and that the government has accepted its recommendation to keep the vertical devolution ratio unchanged.

Mint had reported on 14 June 2025 that the government was inclined to retain the 41% share. With the economy projected to grow at about 7% annu...