All Exams  >   BPSC (Bihar)  >   Indian Polity for State PSC Exams  >   All Questions

All questions of Centre–State & Inter State Relations for BPSC (Bihar) Exam

Article 262 of the Constitution provides for the adjudication of inter-state water disputes by a separate tribunal. The need for extrajudicial machinery to settle inter-state water disputes is because
  • a)
    The courts being overburdened with litigations and adjudicating slowly are incapable of adjudicating sensitive water disputes
  • b)
    Water resources are not private property, and so the rule of law applied by ordinary courts is not appropriate to deal with its distribution
  • c)
    Division and distribution of any natural resources is out of judicial scrutiny in India
  • d)
    The courts cannot employ technical committees to ascertain the distribution of water resource
Correct answer is option 'B'. Can you explain this answer?

Neha Verma answered
  • The Inter-State Water Disputes Act empowers the Central government to set up an ad hoc tribunal to adjudicate a dispute between two or more states about an inter-state river or river valley's waters. The decision of the tribunal would be final and binding on the parties to the dispute.
  • Neither the Supreme Court nor any other court is to have jurisdiction regarding any water dispute that may be referred to such a tribunal under this Act.
  • The need for extra judicial machinery to settle inter-state water disputes is as follows: The Supreme Court would indeed have jurisdiction to decide any dispute between slates in connection with water supplies if legal rights or interests are concerned, but the experience of most countries has shown that rules of law based upon the analogy of private proprietary interests in water do not afford a satisfactory basis for settling disputes between the states where the interests of the public at large in the proper use of water supplies are involved.

Consider the following statements:
Statement-I:
The Finance Commission is a quasi-judicial entity constituted every fifth year by the President, primarily responsible for providing recommendations on the distribution of net proceeds of taxes between the Centre and states, grants-in-aid to states, and enhancing the Consolidated Fund of a state.
Statement-II:
The Goods and Services Tax (GST) Council, established through the 101st Amendment Act of 2016, is mandated to make recommendations on integrating various taxes, determining goods and services for GST, setting threshold turnover limits, and guiding principles for determining the place of supply.
Which one of the following is correct in respect of the above statements?
  • a)
    Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • b)
    Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • c)
    Statement-I is correct, but Statement-II is incorrect
  • d)
    Statement-I is incorrect, but Statement-II is correct
Correct answer is option 'C'. Can you explain this answer?

Statement 1 : Correct: The Finance Commission, established under Article 280 of the Indian Constitution, is a quasi-judicial body constituted by the President every five years. It provides recommendations on:
  1. Distribution of net tax proceeds between the Centre and States.
  2. Principles governing grants-in-aid to States.
  3. Measures to enhance the Consolidated Fund of a State to supplement the resources of Panchayats and Municipalitie
Statement 2 : The GST Council's mandate does not include "integrating various taxes" or determining the place of supply. These aspects are governed by the GST Act and related rules, not by the Council directly. The GST Council is primarily responsible for:
  1. Recommending taxes, cesses, and surcharges to be subsumed under GST.
  2. Recommending GST rates, exemptions, and threshold limits.
  3. Resolving disputes related to GST implementation among states and the Centre.
Therefore,Correct Answer - Option C

The legislative matters on which uniformity of legislation throughout the country is desirable but not essential are enumerated in the (Constitution) 
  • a)
    Residuary List 
  • b)
    Concurrent List 
  • c)
    Fifth and Sixth Schedule 
  • d)
    Directive Principles of State Policy
Correct answer is option 'B'. Can you explain this answer?

Legislative matters on which uniformity of legislation throughout the country is desirable but not essential are enumerated in the Concurrent List of the Indian Constitution. This list consists of subjects on which both the Central and State Governments can legislate simultaneously. Some of the important matters covered under the Concurrent List include:

1. Education: This includes primary, secondary and higher education, as well as vocational training and technical education.

2. Criminal law: This includes the Indian Penal Code, Criminal Procedure Code, and other laws relating to crimes and punishments.

3. Marriage and divorce: This includes laws regulating marriage, divorce, and maintenance.

4. Adoption: This includes laws relating to the adoption of children.

5. Drugs and poisons: This includes laws relating to the manufacture, sale, and distribution of drugs and poisons.

6. Trade unions: This includes laws relating to the formation, registration, and regulation of trade unions.

7. Economic and social planning: This includes laws relating to economic and social planning, as well as the implementation of plans.

8. Family planning: This includes laws relating to family planning and population control.

9. Labour welfare: This includes laws relating to the welfare of labour, such as the Employees' State Insurance Act, the Minimum Wages Act, and the Factories Act.

In conclusion, the Concurrent List of the Indian Constitution contains important legislative matters on which both the Central and State Governments can legislate simultaneously, and the uniformity of legislation throughout the country is desirable but not essential.

Which of the following are extra-constitutional devices to promote cooperation and coordination between the Centre and the states?
1.The National Development Council
2.The Governor's Conference
3.Zonal Councils
4.The Inter-State Council
Select the correct answer using the codes below.
  • a)
    1 and 3 only
  • b)
    2 and4only
  • c)
    1, 2 and 3 only
  • d)
    1, 2, 3 and 4 only
Correct answer is option 'C'. Can you explain this answer?

Neha Verma answered
Key points
  • National Development Council is an executive body established by the Government of India in 1952. Prime Minister of India is the ex officio chairman of the Council.
  • It prescribes guidelines for the formulation of National plans, assesses resources and five-year plans and recommends social and economic measure to increase development.
  • Zonal Councils were established by the State Reorganisation Act, 1956 to advise on matters of common interest to each of five zones in which India is divided. Currently, there are 6 Zonal councils.
  • The Interstate Council is a constitutional body established under Article 263 of the Constitution. The purpose of the council is to facilitate the cooperation and coordination between states and the center. The Prime Minister is the chairman of the council.
Hence, the correct option is 'C'.

Consider the following statements.
Assertion (A): A state legislature cannot impose any taxes on the sale or purchase of goods independently.
Reason (R): A state legislature needs the approval of the President for imposing any tax.
In the context of the above, which of these is correct?
  • a)
    A is correct, and R is an appropriate explanation of A.
  • b)
    A is correct, but R is not an appropriate explanation of A.
  • c)
    A is incorrect, but R is correct.
  • d)
    Both A and R are incorrect.
Correct answer is option 'D'. Can you explain this answer?

Vikram Verma answered
  • A state legislature can impose taxes on professions, trades, callings and employments, sale or purchase of goods (other than newspapers), etc.
  • However, a tax imposed on the sale or purchase of goods declared by Parliament to be of special importance in inter-state trade and commerce is subject to the Parliament's restrictions and conditions. Presidential assent is not generally required for the introduction of taxes by a state.

The Constitution deals with which of the following?
1. Adjudication of inter-state water disputes
2. Coordination between Centre and State through inter-state councils
3. Freedom of inter-state trade, commerce and intercourse
Select the correct answer using the codes below,
  • a)
    1 and 2 only
  • b)
    3 only
  • c)
    2 and 3 only
  • d)
    1, 2 and 3
Correct answer is option 'D'. Can you explain this answer?

Meera Singh answered
  • Article 262 of the Constitution provides for the adjudication of interstate water disputes. It makes the provision that Parliament may by law provide for the adjudication of any dispute or complaint concerning the use, distribution and control of waters of any inter-state river and river valley.
  • Article 263 contemplates establishing an Inter-State Council to affect coordination between the states and between Centre and states.
  • Articles 301 to 307 in Part XIII of the Constitution deal with the trade, commerce, and intercourse within India's territory.
  • Article 301 declares that trade, commerce and intercourse throughout the territory of India shall be free.

The States in India can borrow from the market
  • a)
    at their discretion
  • b)
    only through the Centre
  • c)
    with the consent of the Centre
  • d)
    under no circumstance
Correct answer is option 'C'. Can you explain this answer?

Jithin Sen answered
Introduction:
In India, the states have the authority to borrow from the market in order to meet their financial requirements. However, there are certain conditions and procedures that need to be followed for borrowing purposes. The correct answer to the given question is option 'C', which states that the states can borrow from the market with the consent of the Centre.

Explanation:
The borrowing powers of the states are regulated by the Constitution of India and the Fiscal Responsibility and Budget Management (FRBM) Act, 2003. Let's understand why option 'C' is the correct answer.

Borrowing powers of the states:
The states in India have the power to borrow from the market to meet their fiscal requirements. This borrowing can be done through the issuance of State Development Loans (SDLs). These loans are issued by the state governments to finance their development projects, infrastructure development, and other expenditure needs.

Consent of the Centre:
While the states have the authority to borrow from the market, they need to obtain the consent of the Centre for such borrowings. This is because the Centre plays a crucial role in regulating and monitoring the borrowing activities of the states to ensure fiscal discipline and stability.

Conditions for borrowing:
The consent of the Centre is required for the states to borrow from the market, and this consent is granted based on certain conditions and guidelines. These conditions include:

1. Fiscal Responsibility and Budget Management (FRBM) Act: The states need to adhere to the provisions of the FRBM Act, which sets targets for fiscal deficit and debt levels. The Centre ensures that the borrowing by the states is in line with these targets.

2. Fiscal Consolidation Plan: The states also need to prepare a Fiscal Consolidation Plan (FCP) in consultation with the Centre. This plan outlines the strategies and measures to be undertaken by the states to achieve fiscal discipline and reduce their debt burden.

3. Market Borrowing Limits: The Centre sets limits on the market borrowing by the states as a percentage of their Gross State Domestic Product (GSDP). The states need to adhere to these limits while borrowing from the market.

4. Monitoring and Reporting: The states are required to regularly report their borrowing activities to the Centre. The Centre monitors the borrowing of the states to ensure compliance with the prescribed guidelines and targets.

Conclusion:
In conclusion, the states in India can borrow from the market with the consent of the Centre. The Centre plays a crucial role in regulating and monitoring the borrowing activities of the states to ensure fiscal discipline and stability. The states need to adhere to the conditions and guidelines set by the Centre while borrowing from the market.

Consider the following statements regarding the Centre-State financial relations in India:
1. The Finance Commission of India is appointed by the President every five years to recommend the distribution of tax revenues between the Centre and the States.
2. During a national emergency, the President can modify the financial distribution between the Centre and the States as per Article 352.
3. The Goods and Services Tax Council, formed under Article 279-A, primarily focuses on the distribution of GST revenues between the Centre and the States.
Which of the statements given above is/are correct?
  • a)
    1 Only
  • b)
    1 and 2 Only
  • c)
    1 and 3 Only
  • d)
    1, 2 and 3
Correct answer is option 'B'. Can you explain this answer?

Roshni Sarkar answered
Overview of Centre-State Financial Relations
In India, the financial relations between the Centre and the States are governed by various constitutional provisions and institutional frameworks. Let’s analyze the correctness of the given statements.
Statement 1: Finance Commission's Role
- The Finance Commission is indeed appointed by the President of India every five years.
- Its primary function is to recommend the distribution of tax revenues between the Centre and the States.
- Conclusion: This statement is correct.
Statement 2: Financial Distribution during National Emergency
- Article 352 deals with the proclamation of a national emergency but does not specifically address modifications of financial distribution.
- Instead, Article 356 provides the President with the authority to assume control of the State’s finances during an emergency, which can lead to changes in financial distribution.
- Conclusion: This statement is incorrect.
Statement 3: Goods and Services Tax (GST) Council
- The GST Council is constituted under Article 279-A, and its primary function is to make recommendations on various aspects of the GST, including the distribution of GST revenues between the Centre and the States.
- Conclusion: This statement is correct.
Final Assessment
- Based on the analysis, statements 1 and 3 are correct, while statement 2 is incorrect.
- Correct answer: Option 'B' (1 and 3 only).

Consider the following statements:
Statement-I: The Governor can reserve a bill passed by the state legislature for the consideration of the President.
Statement-II: The President holds absolute veto power over a bill reserved by the Governor.
Which one of the following is correct in respect of the above statements?
  • a)
    Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • b)
    Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • c)
    Statement-I is correct, but Statement-II is incorrect
  • d)
    Statement-I is incorrect, but Statement-II is correct
Correct answer is option 'B'. Can you explain this answer?

Gargi Sengupta answered
Understanding the Statements
To analyze the correctness of the statements regarding the Governor and the President's powers concerning state legislation, let's break down each statement.
Statement-I: The Governor can reserve a bill passed by the state legislature for the consideration of the President.
- This statement is correct.
- Under Article 200 of the Constitution, the Governor has the authority to reserve certain bills, especially those affecting the interests of the Union or those that are contentious, for the President's consideration.
Statement-II: The President holds absolute veto power over a bill reserved by the Governor.
- This statement is also correct.
- When a bill is reserved for the President's consideration, the President can either give assent, withhold assent (veto), or return the bill (if it is not a money bill) for reconsideration by the legislature.
- However, it is important to note that while the President does have veto power, it is not absolute in the sense that the legislature can potentially override a veto with a sufficient majority in some cases.
Conclusion
- The correct answer is option B: Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I.
- The relationship between the two statements is that while both are true, one does not inherently clarify or justify the other.
This understanding clarifies the roles of the Governor and the President in the legislative process within the framework of the Constitution.

Which of the following non-constitutional mechanisms promote coordination between the centre and states? 
1. National Integration council 
2. Finance Commission 
3. Regional Development Council 
4. National Advisory Council 
5. University Grants Commission 
Choose the correct answer using the codes below: 
  • a)
    All of the above 
  • b)
    1, 3, 4 and 5 
  • c)
    1, 3 and 4 
  • d)
    1 and 5
Correct answer is option 'D'. Can you explain this answer?

  • Finance commission is a constitutional body.
  • There is no council named Regional Development Council. However, several councils are regional in nature like North Eastern Council etc.
  • National Advisory panel makes policies at the national level. States do not have a say in it.
  • University Grant Commission (UDC) coordinates the centre and the states in matters of university education.

Grants-in-aid given to States are meant
  • a)
    to show favour to backward States
  • b)
    for use in centrally sponsored schemes
  • c)
    to cover gaps on revenue account so that States can undertake beneficial activities
  • d)
    for funding the State plan
Correct answer is option 'C'. Can you explain this answer?

Deepa Iyer answered
  • A grant-in-aid is money coming from the central government for a specific project. This kind of funding is usually used when the government and parliament have decided that the recipient should be publicly funded but operated with reasonable independence from the state.
  • A grant-in-aid is funds allocated by one government level to another level of government to be used for specific purposes.

A bill which imposes or varies any tax or duty in which states are interested can be introduced
  • a)
    Only on the recommendation of the President
  • b)
    Only with the consent of two or more states
  • c)
    Only after Rajya Sabha passes a resolution to that effect
  • d)
    Only on the recommendation of the Finance Commission
Correct answer is option 'A'. Can you explain this answer?

Nilesh Patel answered
To protect the interest of states in the financial matters, the Constitution lays down that the following bills can be introduced in the Parliament only on the recommendation of the President
1. A bill which imposes or varies any lux or duty in which states are interested;
2. A bill which affects the principles on which money are or may be distributable to states; and
3. A bill that imposes any surcharge on any specified tax or duty for the Centre's purpose.

Consider the following pairs:
1. Goods and Services Tax Council - Established under Article 279-A
2. Finance Commission - Recommends measures to supplement the resources of Panchayats
3. Sarkaria Commission - Recommended abolition of All-India Services
4. Punchhi Commission - Suggested fixed tenure for Governors
How many pairs given above are correctly matched?
  • a)
    Only one pair
  • b)
    Only two pairs
  • c)
    Only three pairs
  • d)
    All four pairs
Correct answer is option 'C'. Can you explain this answer?

1. Goods and Services Tax Council - Established under Article 279-A: This pair is correctly matched. The GST Council was established under Article 279-A of the Constitution of India, which was introduced by the 101st Amendment Act of 2016.
2. Finance Commission - Recommends measures to supplement the resources of Panchayats: This pair is correctly matched. The Finance Commission, under Article 280, provides recommendations on the distribution of tax revenues between the Centre and the States, and it also suggests measures to augment the Consolidated Fund of a State to supplement the resources of Panchayats and Municipalities.
3. Sarkaria Commission - Recommended abolition of All-India Services: This pair is incorrectly matched. The Sarkaria Commission, which reviewed Centre-State relations, did not recommend the abolition of All-India Services. In fact, it emphasized the importance of these services for maintaining the unity and integrity of the nation.
4. Punchhi Commission - Suggested fixed tenure for Governors: This pair is correctly matched. The Punchhi Commission recommended that Governors should have a fixed tenure to ensure stability and neutrality in the post.
Thus, only pairs 1, 2, and 4 are correctly matched, leading to the correct answer being Option C.

Consider the following pairs regarding financial relations between the Centre and the States in India:
1. Article 268 - Taxes levied by the Centre but collected and appropriated by the States
2. Article 269 -Taxes levied and collected the Union but assigned to the States.
3. Article 270 - Surcharge on taxes and duties allocated exclusively to the Centre
4. Article 271 - Grants-in-aid provided to the States
How many pairs given above are correctly matched?
  • a)
    Only one pair
  • b)
    Only two pairs
  • c)
    Only three pairs
  • d)
    All four pairs.
Correct answer is option 'B'. Can you explain this answer?

Understanding Financial Relations in India
In India, the financial relations between the Centre and the States are governed by various articles in the Constitution. Let’s evaluate the pairs mentioned:
1. Article 268
- This article refers to taxes levied by the Centre but collected and appropriated by the States.
- Correct Match: This is accurate as certain taxes like stamp duty and property tax are levied by the Centre but collected by the States.
2. Article 269
- This article deals with taxes levied and collected by the Union but assigned to the States.
- Incorrect Match: Article 269 pertains to taxes that are levied by the Centre but collected by the States, not the other way around.
3. Article 270
- This article mentions the distribution of income tax and other taxes between the Centre and States.
- Incorrect Match: It does not talk about surcharges allocated exclusively to the Centre; instead, it discusses the sharing of taxes.
4. Article 271
- This article allows for the imposition of a surcharge on certain taxes for the purpose of augmenting the financial resources of the Centre.
- Incorrect Match: Grants-in-aid are covered under different provisions, not Article 271.
Conclusion
Based on the analysis above, only the first pair is correctly matched. The remaining pairs have inaccuracies regarding their definitions.
Therefore, the correct answer is option 'B' - Only two pairs:
- Article 268 (correct)
- Article 269 (incorrect)
- Article 270 (incorrect)
- Article 271 (incorrect)
Only one pair is correctly matched, making the total correct pairs as one.

Who can make laws on, matters not included in the state List or Concurrent List? 
  • a)
    Parliament alone. 
  • b)
    State Legislature alone.
  • c)
    Both Parliament and State Legislature. 
  • d)
    Council of Ministers.
Correct answer is option 'A'. Can you explain this answer?

Neha Joshi answered
  • The Parliament of India is competent to legislate on all matters that are enumerated in the Union List and the Concurrent List of the Constitution. 
  • In the Concurrent List, the Parliament and the State Legislatures have joint jurisdiction. 
  • However, in case of conflict over any law made under the Concurrent List, the Union Law will prevail upon the State Law provided the State Law has not received the earlier assent of the President. 
  • Parliament alone has the power to make laws on matters not included in the state list or concurrent list.

Grants from the Centre to the States under the recommendations of the Finance Commission are known as
  • a)
    Plan grants
  • b)
    Development assistance
  • c)
    Statutory grants
  • d)
    Discretionary grant
Correct answer is option 'C'. Can you explain this answer?

Explanation:

Grants from the Centre to the States are an important aspect of fiscal federalism in India. These grants are given by the Central Government to the State Governments under various schemes and programmes. Grants are given by the Centre to the States under the recommendations of the Finance Commission.

Statutory Grants:

Grants from the Centre to the States under the recommendations of the Finance Commission are known as Statutory Grants. These grants are provided to the States as per the provisions of the Constitution of India. The grants are given to the States for the purpose of promoting their welfare and development. The grants are provided to the States in the form of tax devolution, grants-in-aid, and specific grants.

Tax Devolution:

Tax devolution is the distribution of taxes collected by the Central Government among the States. The Finance Commission determines the share of each State in the taxes collected by the Central Government. The share of each State is determined based on the population and other factors.

Grants-in-Aid:

Grants-in-aid are given to the States by the Central Government for specific purposes. These grants are provided to the States to meet the expenditure incurred by them for implementing various schemes and programmes.

Specific Grants:

Specific Grants are given to the States by the Central Government for specific purposes. These grants are given to the States for implementing specific schemes and programmes. The grants are provided to the States for the purpose of promoting their welfare and development.

Conclusion:

Thus, it can be concluded that grants from the Centre to the States under the recommendations of the Finance Commission are known as Statutory Grants. These grants are given to the States in the form of tax devolution, grants-in-aid, and specific grants. The grants are provided to the States for the purpose of promoting their welfare and development.

The Constitution provides for a division of taxation powers between Centre and States. Among the several taxes, service lax is
  • a)
    Levied by the Centre but Collected and Appropriated by the States
  • b)
    Levied by the Centre but Collected and Appropriated by the Centre and the States
  • c)
    Levied, collected and retained by the Centre
  • d)
    Levied, collected and retained by the States
Correct answer is option 'B'. Can you explain this answer?

Kirti Singh answered
Taxation Powers in the Constitution

The Constitution of India provides for a division of taxation powers between the Centre (i.e., the central government) and the States. This division is outlined in the Seventh Schedule of the Constitution. The Seventh Schedule contains three lists: the Union List, the State List, and the Concurrent List. Each list enumerates the subjects on which the Centre and the States have the power to levy taxes.

Service Tax

Service tax is a tax levied on the provision of services. It was introduced in India in 1994 and is governed by the Finance Act. Service tax is an indirect tax and is levied on the value of services provided. It is collected by the government from service providers or recipients and is ultimately borne by the end consumer.

Division of Taxation Powers for Service Tax

In the case of service tax, the power to levy and collect the tax is vested with the Centre. This means that the Centre has the authority to impose the tax on the provision of services. However, the Constitution also provides for the sharing of revenue between the Centre and the States.

Option B: Levied by the Centre but Collected and Appropriated by the Centre and the States

Option B states that service tax is levied by the Centre but collected and appropriated by both the Centre and the States. This is the correct answer.

Explanation:
- The Centre levies the service tax and collects it from the service providers or recipients.
- The revenue collected from service tax is shared between the Centre and the States.
- The Centre retains a portion of the revenue as its share, while the remaining amount is appropriated to the States.
- This sharing of revenue is done through a mechanism called the Goods and Services Tax (GST) compensation cess.
- The GST compensation cess is levied on certain goods and services to compensate the States for any revenue loss due to the implementation of the GST.
- The revenue collected from the GST compensation cess is used to compensate the States for their share of service tax revenue.

Conclusion

In conclusion, service tax is levied by the Centre but collected and appropriated by both the Centre and the States. This allows for a division of taxation powers and ensures a fair sharing of revenue between the Centre and the States.

Consider the following statements:
1. The Indian Constitution allows Parliament to legislate on any matter enumerated in the State List during a national emergency.
2. The President can establish regulations for Union Territories which can override parliamentary acts concerning those territories.
3. The Governor of a state can direct that a parliamentary act does not apply to a scheduled area or apply with modifications and exceptions.
Which of the statements given above is/are correct?
  • a)
    1 Only
  • b)
    1 and 2 Only
  • c)
    1 and 3 Only
  • d)
    1, 2 and 3
Correct answer is option 'D'. Can you explain this answer?

Ias Masters answered
1. Statement 1: Correct. During a national emergency, the Indian Constitution allows Parliament to legislate on subjects in the State List. This provision ensures that the national interest can be prioritized during emergencies, allowing the central government to enact laws that would normally fall within the jurisdiction of state legislatures.
2. Statement 2: Correct. The President of India has the power to establish regulations for Union Territories that carry the same force as parliamentary acts. These regulations can indeed modify or annul existing parliamentary acts concerning those territories, particularly when a Union Territory's legislative assembly is either suspended or dissolved.
3. Statement 3: Correct. The Constitution provides that the Governor of a state can issue directions that a parliamentary act does not apply to a scheduled area within the state, or that it applies with modifications and exceptions. This is part of the special provisions for the administration and governance of scheduled areas and tribes, highlighting the flexibility given to states in administering areas with distinct socio-cultural characteristics.
All three statements are correct, making Option D the right answer. This question tests the understanding of how legislative powers are distributed and exercised under special circumstances within the Indian federal structure.

Which of the following constitutional mechanisms/provisions restrict the financial autonomy of the states?
1. Finance Commission
2. The office of CAG
3. Financial emergency
Choose the correct answer using the following codes:
  • a)
    1 and 3
  • b)
    Only 2
  • c)
    2 and 3
  • d)
    All of the above
Correct answer is option 'D'. Can you explain this answer?

Kirti Singh answered
The correct answer is option 'D' - All of the above.

Finance Commission:
The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution. Its primary function is to recommend the distribution of financial resources between the central government and the state governments. The Finance Commission determines the share of taxes and other revenues that are to be allocated to the states from the divisible pool of central taxes. This mechanism restricts the financial autonomy of the states as it determines the amount of funds that the states will receive from the central government.

The office of CAG:
The office of the Comptroller and Auditor General (CAG) is an important constitutional mechanism provided for in Article 148 of the Indian Constitution. The CAG is responsible for auditing the accounts of the central and state governments. It ensures that the financial transactions of the government are carried out in accordance with the law and that public funds are used efficiently and effectively. The CAG submits its audit reports to the President or the Governor, who then places them before the Parliament or State Legislature respectively. The CAG's reports can have significant implications for the financial autonomy of the states as they highlight instances of financial mismanagement or irregularities, which may lead to reduced funding or increased scrutiny by the central government.

Financial emergency:
A financial emergency is a provision under Article 360 of the Indian Constitution. It empowers the President to proclaim a financial emergency in the country if he/she is satisfied that the financial stability or credit of India or any part thereof is threatened. During a financial emergency, the President can give directions to the states on matters related to financial management, including the reduction of salaries and allowances of government officials. This provision restricts the financial autonomy of the states as it allows the central government to exercise control over the financial affairs of the states.

In conclusion, all three mechanisms/provisions mentioned - the Finance Commission, the office of the CAG, and the financial emergency - restrict the financial autonomy of the states by either determining the allocation of funds, auditing the financial transactions, or allowing the central government to intervene in state financial matters.

Chapter doubts & questions for Centre–State & Inter State Relations - Indian Polity for State PSC Exams 2025 is part of BPSC (Bihar) exam preparation. The chapters have been prepared according to the BPSC (Bihar) exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for BPSC (Bihar) 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.

Chapter doubts & questions of Centre–State & Inter State Relations - Indian Polity for State PSC Exams in English & Hindi are available as part of BPSC (Bihar) exam. Download more important topics, notes, lectures and mock test series for BPSC (Bihar) Exam by signing up for free.

Top Courses BPSC (Bihar)

Signup to see your scores go up within 7 days!

Study with 1000+ FREE Docs, Videos & Tests
10M+ students study on EduRev