A look at the devolution of taxes in the last five years available in the published Indian Budget figures of the period (the actual budget figures for the period from 2015-16 to 2017-18, the revised budget figure for 2018-19 and budget estimates for 2019-20) throw some light.

In the 2015-2016 Union budget, out of the total receipts of Rs.14.556 lakh crore, Rs. 12.580 lakh crore or 86.4 per cent was set aside for the divisible pool and 42 per cent of which (Rs. 5.284 lakh crore) was shared among States and the rest went to the Union Government (See Table).

In the 2019-20 Budget, the figures are ₹24.612 lakh crore, ₹19.265 lakh crores, and 78.3 per cent respectively—out of which ₹8.091 lakh crores is earmarked as share of the states.

What it means is that when total tax receipts in the Union Budget increased in the last five years by 69 per cent (from ₹14.556 lakh crore in 2015-16 to ₹24.612 lakh crore in 2019-20), the devolution to the states increased by only 53 per cent (from ₹5.283 lakh crore in 2015-16 to ₹8.091 lakh crores in 2019-20). Same time, the total share to Union Government increased by 78 per cent (from ₹9.272 lakh crore in 2015-16 to ₹16.521 lakh crores in 2019-20)!

This also means that during 2015-16, the states’ share of Rs.5.283 lakh crore was 36.30 per cent of the total tax receipts of Rs.14.556 lakh crores of that year.

But in the 2019-20 budget, this has been reduced to 32.88 per cent. This ratio is likely to go down further when the effect of the recent corporate tax cut hits the divisible pool, which will be disclosed only when the Government presents the revised budget for this year in the next budget.