The Finance Commissions is periodically constituted by the President of India under Article 280 of the Indian Constitution to define the financial relations between the Union government & the individual state governments.
India-Union of States strengthens from this collaboration
India-Union of States strengthens from this collaboration
Finance Commission is required to make recommendations on:
(i) sharing of central taxes with states, (ii) distribution of central grants to states
(iii) measures to improve the finances of states to supplement the resources of panchayats and municipalities
(iv) any other matters
(i) sharing of central taxes with states, (ii) distribution of central grants to states
(iii) measures to improve the finances of states to supplement the resources of panchayats and municipalities
(iv) any other matters
The finance commission consists of the chairman & 4 other members. The Chairman should have had public affairs experience.
The Parliament determines legally the qualifications of the members of the Commission and their selection methods.
The Parliament determines legally the qualifications of the members of the Commission and their selection methods.
This body does a bunch of things, but it is best known for fixing the transfers of money from richer states to poorer ones.
That's good, but there has been a problem with it all along.
This money is not clearly translating into better development in the poor states.
That's good, but there has been a problem with it all along.
This money is not clearly translating into better development in the poor states.
The Constitution mandates that the Centre share the tax proceeds with the states, which also tap other revenue sources such as tax on petrol and diesel, stamp duty and excise on alcohol. The formula for sharing revenues is decided by the Finance Commission every five years.
NFC has suggested that states be given 41% of the Centre’s net tax receipts during the next financial year, as against 42% for 2015-16 to 2019-20, arguing that the 1 percentage point change was on account of Jammu & Kashmir and Ladakh being converted into union territories.
If anything, the gap between rich and poor states is growing.
The NFC should come up with a mechanism to ensure that redistributed funds from the richer states are only spent on
education,
healthcare,
transparency in government, and protection of rights in recipient states.
The NFC should come up with a mechanism to ensure that redistributed funds from the richer states are only spent on
education,
healthcare,
transparency in government, and protection of rights in recipient states.
The contribution of the donor states should be acknowledged in these initiatives.
The formula for calculating the transfers should also include a gradual but time-bound end to it.
Helping others help themselves should end with them helping themselves.
The formula for calculating the transfers should also include a gradual but time-bound end to it.
Helping others help themselves should end with them helping themselves.
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