They also agreed that the permissible limits on borrowings under fiscal consolidation roadmap needed to be equally applicable to the Centre and states.
"Economists agreed that it would be realistic to use contemporary population data but weightage should be assigned to population and also rewards for population stabilization policy," an official statement said after the Commission held a meeting with leading economists of the country.
The statement said the finance panel would take an appropriate decision on the suggestions as it needed to balance equity with efficiency.
Several leading economists including Chief Economic Adviser Arvind Subramanian, Indian Statistical Institute's Bharat Ramaswami, International Growth Centre's Pronab Sen, Delhi School of Economics' Pami Dua, economist Abhijit Sen and part-time member of Prime Minister's Economic Advisory Council Surjit Bhalla were present at the meeting.
The participants also discussed the taxation capacity of states and suggested that any formula on devolution needed to be formed by equity, justice and uniformity.
Commission Chairman N.K. Singh said that continued engagement with domain experts over the coming months will help the panel in firming up the approach before reaching tentative conclusions both on the vertical and horizontal devolution of revenue.
"Besides an approach for local bodies and panchayats which were both realistic and would genuinely deliver the intended resources to the beneficiaries," he said.
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