Topic:Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.
2)The challenge for the 15th finance Commission is to strike a balance between those who need and those who perform. Comment in light of the concerns of Northeastern states of India.(250 words)
Why this question
The 15th finance commission has raised several issues and a hot debate around them. The issue becomes important for UPSC mains and all the related aspects should be studied in detail. The issue is related to GS-2 syllabus under the following heading –
Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.
Key demand of the question
The question wants us to bring out the challenge faced by the commission in striking a balance between the states who need more funds and those who perform well on various indicators. We have to highlight the issue of the NE states and bring out their concerns related to the challenge faced by the commission.
Comment- We have to express our knowledge and understanding of the issue- challenge for the commission and how NE fits into that challenge. We have to form an opinion on the issue and support that opinion with facts/ arguments/ examples.
Structure of the answer
Introduction – Mention the constitutional provisions related to finance commission and mention that the devolution formula is central to the approach of resource transfers as mandated by the finance commission.
- Mention that The 14th FC accorded 27.5% weight to the population (of which 17.5% was of the 1971 population), 15% to area, 7.5% to forest cover and 50% to income distance. Mention the changes proposed by the terms of 15th finance commission. E.g change in population base etc.
- Discuss the special concerns of NE states of India. E.g Maintenance of assets, such as rural roads under the Pradhan Mantri Gram Sadak Yojana, require huge expenditure, especially in hilly States; using per capita GSDP as an indicator of fiscal capacity uniformly for all States without taking into care the lower average tax to GSDP ratio for NE states; revision of the base year to 2011-12 by the Central Statistics Office from 2004-05 also created complications like increasing GSDP without any actual related growth; high disaster burden of NE states etc.
Conclusion– suggest a way forward on how the 15th finance commission should proceed and what factors should be taken into consideration etc.