lannin in ndia         5.33
           (i) States now get 42 per cent share in the pool                Commission by the Parliament limited its
                of taxes of the Centre (recommendation                     functions to the extent of finding out revenue gap
                of the Fourteenth Finance Commission                       of the states, besides recommending for the ‘grant-
                accepted).                                                 in-aids to the states from the Centre. The finance
          (ii) States are getting liberal funding (loan plus               commission cannot determine the capital-related
                grants) from the Centre to implement the                   issues of the states (though the Constitution does
                State Plans.                                               not classify between the capital or revenue related
        (iii) One of the aims behind implementing                          roles of the commission while determining the
                the proposed GST is to the enhance the                     Centre’s assistance to the states).
                internal financial capacity of the states                        In the meantime, to promote the process of
                as the new tax will increase the gross tax                 planning, an extra-constitutional body, i.e., the
                collections of the states.                                 Planning Commission was set up even before
         (iv) States are now free to go for higher market                  the First Finance Commission was set up. The
                borrowings without any permission from                     Planning Commission played a very vital role in
                the Centre (but such a move has to come                    the process of determining Central assistance to
                from the Centre). The UDAY (Ujwal                          the states as all development plans, programmes
                Discom Assurance Yojana), launched in                      and projects are within its purview. All grants
                2015–16 is one of such approvals of the                    or loans given by the Centre to the states for
                Central government under which states
                                                                           developmental works are practically dependent
                are allowed to issue ‘UDAY Bonds’ up to
                                                                           on the recommendations of the Planning
                75 per cent of the dues of the electricity
                                                                           Commission. And that is why the role of the
                distribution companies (Discom) of the
                                                                           Planning Commission was said to ‘confine’96
                states (by mid-2016, the total discom
                                                                           the role of the Finance Commission, i.e., a non-
                debt in the country amounted to Rs. 4.3
                lakh crore).                                               constitutional body eclipsing a constitutional
                                                                           body. P.J. Rajamannar who headed the Finance
        thE pLAnnInG coMMISSIon & thE                                      Commission (1966–69) suggested to clearly
                                                                           define the relative scope and functions of the two
        FInAncE coMMISSIon
                                                                           commissions by amending the Constitution, and
     Federal political systems provide independent                         the Planning Commission was advised to be made
     financial control to the central as well as the                       a statutory body independent of the government.
     state governments so that they are able to                            But no such follow ups came from the successive
     perform their exclusive functions.94 For the same                     governments at the Centre. But one thing was
     objective, the Constitution of India has made                         important, most of the finance commissions
     elaborate provisions,95 i.e., setting up of a Finance                 devoluted some extra shares in the central taxes
     Commission to recommend to the President                              (i.e., the income tax and the central excise) and
     certain measures relating to the distribution                         grants-in-aid.
     of financial resources between the Union and
                                                                                 Since the decade of the 1990s, certain events
     the states. But the powers given to the Finance
                                                                           made the Central Government change its mindset
       94.    As K.C. Wheare writes about the classical federal            regarding the role of the states in the process of
              constitutions in Federal Government (New Delhi: Oxford
              University Press, 1956), p. 97.                                96.   Ministry of Finance, Report of the Fourth Finance
       95.    Articles 270, 273, 275 and 280 of the Constitution of India.         Commission, p. 88.