In India, the Finance Commissions are established pursuant to the constitutional mandate. In this context, do you think the State Finance Commissions have been effective in promoting fiscal federalism? Substantiate with arguments.

Article 280 provides for the Finance Commission to be constituted by President of India. However, the State Finance Commission were later mandated by 73rd and 74th CAA. Article 243I - Governor shall constitute to review the financial position of Panchayats. Article 243Y - for Municipalities to promote fiscal federalism. How but we saw certain issues - (1) Many states have not constituted regularly e.g. Jharkhand, not since ever once. (2) State Finance Commissions are dominated by bureaucrati rather than the academicians (3) Lack of data - local government do not have proper budgeting system. They rely on grants from states mostly. (4) There was lack of follow up from local bodies (5) Apathetic attitude of states, lack of clarity about roles. (6) They are mostly seen as raising lower constitution status than Central Finance Commission - lack of will.

RBI has suggested measures to strengthen State Finance Commission: (1) Mandate all states to form regular State Finance Commissions. (2) More autonomy to local bodies in fiscal matters. (3) Independent fiscal mechanism. (4) Guidelines & qualification for State Finance Commissioners. In Recent Reports, most states are experiencing high fiscal deficit. It hamper the growth & largely due to ease of tracking at local/decentralized level. State Finance Commission can better be strengthened & check the financial Matters.