The 16th finance commission has started its study tours to different states, including Kerala, to prepare its report amidst significant tensions in Centre-state financial relations. Kerala is hopeful that the commission will review the tax structure and revenue sharing comprehensively. The state government has put in extensive efforts to prepare and submit a memorandum to the commission. There is a significant gap between the revenue and expenditure of the Centre and states, with states bearing the primary responsibility for development and social welfare. The finance commission is appointed every five years to address this financial imbalance. However, states are facing challenges in borrowing for development purposes due to restrictions imposed by the Centre. The Centre’s borrowing has been increasing, leading to concerns about the overall debt levels.
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