Question Q5GS2GS2
State Finance Commission was introduced as part of 73rd & 74th amendments - of local bodies: Panchayats & Municipalities.
Main Body
Role of SFC:
1To determine principles governing distribution of net proceeds of taxes & duties (between) state & local bodies.
2To support grant-in-aids to local bodies
3To suggest ways of augmenting consolidated fund of state to increase funds availability to local bodies.
This can be utilised to build regional equity - by greater decentralization
by ensuring financial autonomy of regional bodies.
& federal sink - by coordinating with central finance commission in augmenting state revenue.
However, it remains underutilised:
1Irregular constitution of SFC by states
2Restricted terms of reference, avoiding devolution of powers to local bodies
3ITs services haven't been utilised to augment taxing powers of local bodies
(by) CAG Report, 2024: only 30% of revenues of local bodies come from own sources.
4ITs recommendations are not adhered to in spirit.
Panchayat Devolution Index: only 44% in India.
147 words4 paragraphs2 bullet points
Conclusion
Thus, greater role of SFC needs to be ensured for realising goals of DPSGs - M340.
16 words
Topper
Ishita Sharma
AIR 2682025
Subject & Paper
GS2GS2
Topic
Federal Structure - Functions, Responsibilities, Devolution of Powers and Finances
Centre-State Financial Relations
State Finance Commission and local bodies
Writing Stats
163
Total words
4
Paragraphs
2
Bullets
expository
Tone