Centre-State Financial Relations
Distribution of Resources
The transfer of resources from the Centre to the States are of three types–
Grant-in-Aid – There is a provision for grants-in-aid by the Centre to the States for specific purposes (under Article 275 and quantum is decided by Finance commission) or any public purpose (under article 282 and quantum is decided by the Centre on its own discretion).
The grants also serve the purpose of correcting inter-State disparities in resources. They also help in the exercise of a certain measure of Centre control and co-ordination over essential welfare services and development programmes in different States.
Loans – The State are authorised to raise loans in the market but they also borrow from the union government which gives the latter considerable control over State borrowing and expenditure.
The rate of annual borrowing by the States from the Union has considerably increased during recent years.
Transfer of Resources
Finance Commission
The List I of Seventh schedule of Indian Constitution enlists the union taxes which are as follows:
List II of Seventh schedule enlists the taxes which are within the jurisdiction of the states :
Apart from taxes levied and collected by the states, the constitution has provided for the revenues for certain taxes on the union list to be allotted, partly or wholly to the states. These provisions fall into various categories:
Fourteenth Finance Commission Recommendations
Sarkaria Commission Recommendations
NITI Aayog
The NITI Aayog will workards the following main Objectives :
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1. What is the concept of Centre-State Financial Relations? |
2. How does the traditional economy impact Centre-State Financial Relations? |
3. What are the key factors influencing Centre-State Financial Relations? |
4. How does revenue sharing work in Centre-State Financial Relations? |
5. What are the challenges faced in Centre-State Financial Relations? |
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