ABSTRACT
Public services which are at the core of a more equitable social order and human resource development are population centric. A shift to the latest demographics is necessary since public expenditure by states and therefore their needs is related to current population. It is in this context the chapter examines the likely implications of the use of the 2011 population by the Fifteenth Finance Commission as mandated by its terms of reference. The chapter points out that it is premature to assume that states where population share has declined will receive lower transfers. The tax sharing formula used by some of the recent FCs was a combination of factors reflecting equity, need and efficiency. The ultimate outcome would, however, depend on how the Commission treats each of these factors in arriving at the horizontal allocation of resources. However, binding the Commission’s work to a particular reference population is arbitrary and unfair to all the stakeholders including the Commission. In that context, although the use of the 2011 population is important, the most fair criterion to assess need will be the current population.
