How have the recommendations of the 14th Finance Commission of India enabled the States to improve their fiscal position?

14th Finance Commission (FC) recommendations (Article 280, 281) made in the backdrop of dismantling of Planning Commission (PC) was significant as PC also provided discretionary tied grants to states under Article 282.

14^th FC strengthened fiscal position of states by:

• Increasing vertical distribution of taxes from 32% to 42% in the form of untied grants.
• Providing broader parameters for horizontal distribution of taxes – 1971 census, changes in population since then, income distance, forest cover and area etc. 
• Providing maximum weightage to “income distance” (50%) for horizontal distribution of taxes which was based on per capita income of states ensuring more funds for poor states.
• Considering the state's entire revenue expenditure needs without distinguishing between plan and non-plan expenditure.
• Providing grants for Panchayats and Municipalities - 2011 Census.
• Ensuring Basic and Performance grants in the ratio of 90:10 for Panchayats and 80:20 for Municipalities.
• Creating ‘GST Compensation Fund’ to address lack of revenue  
• Providing revenue deficit grants to some states.

Thus, 14th FC has not only strengthened cooperative federalism but ensured greater financial autonomy and funds to states for their overall growth and development.