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NEW DELHI: Only seven states — Rajasthan, Haryana, Tamil Nadu, Bihar, Kerala, Assam and Himachal Pradesh — have constituted all seven State Finance Commissions (SFCs) since 1992–93, when Parliament passed two constitutional amendment Acts to institutionalise local govts in urban and rural areas, according to a report published by Janaagraha, a think tank on local governance.This highlights how most state govts have failed to prioritise the institutionalisation of SFCs, which play a crucial role in devolution of finances to municipal and other local bodies. The study on SFCs flagged chronic delays in constituting these commissions, weakening them from inception. In many cases, SFCs were constituted with truncated tenures — sometimes as short as six months — and continued functioning through repeated extensions.In contrast, the Finance Commission (FC) set up by Centre has a fixed two-year term. The report noted that despite being the most predictable source of funding for cities and towns, SFCs remain neglected and unevenly empowered across states.It called for giving SFCs the same standing as FC. Its recommendations include fixing timelines for constituting SFCs, ensuring adequate staffing and data systems, and requiring state govts to present Action Taken Reports in their assemblies within six months, with clear explanations for accepted or rejected proposals.The report highlighted that transfers from state govts to local bodies, as recommended by SFCs, are, on average, nearly four times larger than those by FC, making SFCs vital to local govts. This is particularly significant given that most urban local bodies have weak own-source revenues.According to the report, own-source revenues of municipal bodies cover only 60–70% of their recurrent expenditure. They largely depend on state and central grants for capital investment and some operational spending. It also noted that 72% of urban infrastructure is financed by central and state govts.“Scheme funding is typically sector-linked, and its continuity cannot always be guaranteed. In comparison, devolutions recommended by FC and SFCs are meant to provide predictable, flexible and autonomous funding to meet local needs,” the report said. It added that in many states, SFC grants are the only predictable source of funds for municipal bodies — not just for asset creation but also for payment of staff salaries and operational and maintenance expenses.For instance, in Karnataka, SFC grants accounted for over 75% of total receipts in smaller municipalities and 40–50% in larger cities.

Billionaire Warren Buffett’s advice for most investors has been to buy a low-cost fund that tracks the S&P 500. But that looks like a risky proposition to me right now.

The index is heavily concentrated around a few very similar companies. And the rest of the US economy doesn’t give me much encouragement either.

Concentration

Overall, the S&P 500’s done very well in recent years. But not every company’s done equally well — a handful of strong performers have offset much weaker results elsewhere.

For example, Microsoft’s revenues grew by around 15% in 2025, while Kraft Heinz saw a 2.5% decline in sales. For the index as a whole though, the net effect’s positive.

Microsoft’s sales increased by $36bn, while the drop at Kraft Heinz was less than $1bn. In other words, growth at bigger firms offsets a lot of smaller businesses going backwards.

The trouble is, it also creates risk. If at business like Microsoft falters for any reason, I don’t think there are going to be enough Kraft Heinz-like firms to offset this. 

The US economy

Something similar is true of the US economy. Consumer spending – which accounts for around 70% of US GDP – looks resilient, but there’s more going on beneath the surface.

In reality, the overall resilience is being driven by strong contributions from the most well-off in society. And just like the index, this has the power to cover a lot of weakness elsewhere. 

A a result, the same risk emerges. If anything causes the wealthiest households in the US to rethink their consumption levels, this is unlikely to be offset by increased spending elsewhere.

As a result, I’m wary of the idea that investing in an S&P 500 fund is a good idea right now. But I do think there are potential opportunities within the index.

Insurance

One stock I’ve been buying recently is Brown & Brown (NYSE:BRO). The stock’s 37% off its 52-week highs, but I think there are some strong signs for the underlying business.

The insurance broker’s been dealing with two major issues recently: a weak market for insurers and integration costs after a large acquisition weighs on margins.

Both are genuine challenges, but I expect they will prove to be temporary. So I think the two of them combining to push the stock to unusually low levels could be a huge opportunity.

Brown & Brown aims to combine the advantages of local knowledge with the economic benefits of scale. In an industry I think will be durable, that’s a powerful combination.

Investing strategy

One of the things I want from my Stocks and Shares ISA is diversification. And that’s why I’m unwilling to just ignore US stocks even when the S&P 500 as a whole looks risky.

I think Brown & Brown could be set to benefit from a double boost. A more helpful market for insurers could push sales higher while lower integration costs cause margins to expand.

The company’s long-term competitive position also looks strong to me. That’s why it’s still on my ‘to-buy’ list as I look for stocks to scoop up during a tricky time for the S&P 500 and the US economy.