Question 09GS2GS2

Highlight the concerns related to Terms of Reference of 15th Finance Commission. Discuss how the Commission has balanced conflicting interests.

Main Body

Article 280 of Constitution provides for Finance Commission. Terms of Reference of 15th FC: (1) Union taxes' vertical distribution b/w Centre & State & Horizontal distribution between state. (2) Grants in aid to state by union (3) Use census 2011 for calculating (4) Performance based incentives to state (5) Should union Centre to provide Revenue deficit grants? (6) Unions New India 2022 vision should be kept in mind - Other matters. Concerns Related to ToR: a Expansion of tax nets: Manipur can't do equal to Maharashtra. b Population control: Gangetic plain more fertility rate so they worry that south states will get more funds. c Controlling populist schemes: Tamil Nadu worries because it offers free schemes to huge population. Eg: TV distribution. d Controlling power sector loss: Electricity theft is rampant in North India ~50 they are concerned (2) Census 2011 data use - 15% weightage southern states fear they will loose funds.

3Vision for New India 2022: Finance Commission has to consider this to allocate more resources to Union. State fear loss of funds. Steps by 15th FC to balance Conflicting interests: (1) Vertical devolution: 41% + 4% for UTs of J&K & Ladakh devolved to state. (2) Horizontal devolution: Using following formula with weightage: - 15% → Area 12.5 y.→ Demographic performance - 15% → Population 45 y.→ Income distance - 10% → Forest 25 y.→ Tax efforts (3) Growth in-aid: a Local bodies growth b Post devolution revenue deficit growth c Disaster management grant d Sector specific grants eg: Health e State specific grants f Special grants eg: Mizoram Others: Reforming Local government bodies & its governance. - Bring more accountability in states. Economic Survey 2016-17 had observed Aid-cum [transfer of resources & development]. 15th FC aims to correct that by linking fund disbursement with Accountability. Despite state concerns this will help in comprehensive development.

309 words1 paragraphs

Conclusion

Economic Survey 2016-17 had observed Aid-cum [transfer of resources & development]. 15th FC aims to correct that by linking fund disbursement with Accountability. Despite state concerns this will help in comprehensive development.

32 words

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Page 22

Topper

Abhishek Singh

Subject & Paper

GS2GS2

Topic

Federal Structure - Functions, Responsibilities, Devolution of Powers and Finances

Centre-State Financial Relations

15th Finance Commission - Terms of Reference and Concerns

Writing Stats

341

Total words

Paragraphs

analytical

Tone