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The practice of 'Fiscal Federalism' in India involves
- a)Distribution of financial powers between Centre and States
- b)Setting up of Finance Commission every five years
- c)Devolution of the central pool to states
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
The practice of 'Fiscal Federalism' in India involves a) Distribution...
Fiscal Federalism in India
Fiscal federalism refers to the distribution of financial powers between the Centre and the States. In India, the practice of fiscal federalism is enshrined in the Constitution and involves several components.
Distribution of Financial Powers
The Constitution of India divides the financial powers between the Centre and the States through the Union List, State List, and Concurrent List. The Union List contains subjects on which only the Centre can legislate and collect taxes, while the State List contains subjects on which only the States can legislate and collect taxes. The Concurrent List contains subjects on which both the Centre and the States can legislate, but the Centre has the power to override the State laws in case of a conflict.
Setting up of Finance Commission
The Finance Commission is set up every five years to recommend the distribution of the central pool of taxes between the Centre and the States. The Commission also recommends measures to improve the finances of the States and grants-in-aid to the States based on their needs.
Devolution of Central Pool to States
The devolution of the central pool of taxes to the States is based on the recommendations of the Finance Commission. The devolution is done through the Finance Commission Grants, which are provided to the States to meet their revenue deficits and developmental needs.
Conclusion
In India, fiscal federalism is an important aspect of the federal structure of governance. It ensures that the financial powers are distributed between the Centre and the States in a manner that promotes cooperative federalism and ensures the overall development of the country.
Fiscal federalism refers to the distribution of financial powers between the Centre and the States. In India, the practice of fiscal federalism is enshrined in the Constitution and involves several components.
Distribution of Financial Powers
The Constitution of India divides the financial powers between the Centre and the States through the Union List, State List, and Concurrent List. The Union List contains subjects on which only the Centre can legislate and collect taxes, while the State List contains subjects on which only the States can legislate and collect taxes. The Concurrent List contains subjects on which both the Centre and the States can legislate, but the Centre has the power to override the State laws in case of a conflict.
Setting up of Finance Commission
The Finance Commission is set up every five years to recommend the distribution of the central pool of taxes between the Centre and the States. The Commission also recommends measures to improve the finances of the States and grants-in-aid to the States based on their needs.
Devolution of Central Pool to States
The devolution of the central pool of taxes to the States is based on the recommendations of the Finance Commission. The devolution is done through the Finance Commission Grants, which are provided to the States to meet their revenue deficits and developmental needs.
Conclusion
In India, fiscal federalism is an important aspect of the federal structure of governance. It ensures that the financial powers are distributed between the Centre and the States in a manner that promotes cooperative federalism and ensures the overall development of the country.
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The practice of 'Fiscal Federalism' in India involves a) Distribution...
- Federalism refers to the division of responsibilities and functions between the Centre and States. Fiscal federalism is an important component of federalism. It refers to all financial matters conducted between the Centre and states with a view of a political federal structure in mind.
- For example, the 14th FC has radically enhanced the share of the states in the central divisible pool from the current 32 per cent to 42 per cent which is the biggest ever increase in vertical tax devolution. This is supposed to strengthen fiscal federalism.
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The practice of 'Fiscal Federalism' in India involves a) Distribution of financial powers between Centre and States b) Setting up of Finance Commission every five yearsc) Devolution of the central pool to states d) All of the aboveCorrect answer is option 'D'. Can you explain this answer?
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