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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.