The Fourteenth Finance Commission of India recommended that the States’ share in the net proceeds of Union tax revenues be increased from 32 percent to which higher percentage level?

Introduction / Context:
Finance Commissions in India are constitutional bodies that recommend how the net proceeds of Union tax revenues should be shared between the Centre and the States. The Fourteenth Finance Commission, which covered the period from 2015–16 to 2019–20, is especially notable for recommending a significant increase in the States’ share. This question tests your recall of the exact recommended percentage.

Given Data / Assumptions:
- Before the Fourteenth Finance Commission, the States’ share in the divisible pool of Union taxes was 32 percent.
- The Commission recommended an increase in this share to strengthen fiscal federalism.
- You are given several possible new percentages: 35 percent, 40 percent, 42 percent and 45 percent.

Concept / Approach:
The key is simple factual recall. The Fourteenth Finance Commission made news for recommending that the share of States in the net proceeds of Union tax revenues be increased from 32 percent to 42 percent. This 10 percentage point jump was intended to give States more predictable and untied funds, thereby enhancing their autonomy in designing and implementing development programmes.

Step-by-Step Solution:
Step 1: Remember that the pre existing share was 32 percent, based on earlier Finance Commission recommendations.Step 2: Recall that the Fourteenth Finance Commission recommended an increase by a full 10 percentage points, not just a modest change.Step 3: Adding 10 percentage points to 32 percent gives 42 percent, matching one of the options provided.Step 4: Check that none of the other options (35, 40 or 45 percent) correspond to the widely discussed figure in policy debates about fiscal devolution.

Verification / Alternative check:
You can verify by recalling how the recommendation was framed in media reports: the Commission was said to have increased States’ share from 32 percent to 42 percent of the divisible pool of central taxes. The number 42 percent became a shorthand for a stronger push towards cooperative federalism. Official summaries of the Commission’s report also highlight this figure prominently.

Why Other Options Are Wrong:
Option A, 35 percent, represents only a minor increase and does not match the landmark change recommended. Option B, 40 percent, is closer but still not the precise figure. Option D, 45 percent, would have implied an even more dramatic shift, which was not what the Commission proposed. Only 42 percent fits the actual recommendation.

Common Pitfalls:
Some candidates may recall that there was a significant increase and guess 40 or 45 percent because they remember only that the share rose by around 10 to 13 percentage points. Others may confuse recommendations of different Finance Commissions. It is useful to memorise key benchmark numbers: 32 percent before the Fourteenth Commission and 42 percent afterwards, as these often appear in objective questions.

Final Answer:
The Fourteenth Finance Commission recommended increasing the States’ share from 32 percent to 42%.