UPPSC-UPPCS Mains- Answer writing practice #51

UPPSC/UPPCS Mains- Answer writing practice

In the light of fiscal federalism discuss the importance of state finance commission. (125 w)

राजकोषीय संघवाद के आलोक में राज्य वित्त आयोग के महत्व पर चर्चा करते हैं। (125 w)


Model Answer

The State Finance Commission (SFC) is a unique institution created by the 73rd and 74th Constitutional Amendments to rationalise and systemise state/sub-state level fiscal relations in India. It has been enshrined in Articles 243-I and 243-Y of the Indian Constitution and are constituted  every 5 years by respective Governors in  each state.

Importance of SFCs in strengthening fiscal federalism in India:

  • It recommends the principles that govern- o Distribution between the State and the local bodies of the net proceeds of the taxes, duties, tolls and fees leviable by the State.
  • Determination of the taxes, duties, tolls and fees levied or appropriated by the local bodies.
  • Grants-in-aid to the local bodies from the Consolidated Fund of the State.
  • Measures needed to improve the financial position of the local bodies.
  • Its primary task is to rectify growing horizontal imbalances in the delivery of essential services to citizens.

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