ISS Previous Year Paper 2019 GS Solution Question 3(b) Fifteenth Finance Commission and Fiscal Federalism in India

ISS Previous Year Paper 2019 GS Solution Question 3(b) Fifteenth Finance Commission and Fiscal Federalism in India. Detailed answer discussing the role of the Finance Commission and its implications for Centre-State financial relations.

ISS Previous Year Paper 2019 GS Solution Question 3(b) Fifteenth Finance Commission and Fiscal Federalism in India

ISS Previous Year Paper 2019 GS Solution Question

Q.3(b) Discuss the role of the Fifteenth Finance Commission in strengthening fiscal federalism in India.

Answer :

The Fifteenth Finance Commission (FFC) was constituted under Article 280 of the Constitution to recommend the distribution of financial resources between the Centre and the States. Its recommendations are vital for maintaining fiscal balance and promoting cooperative federalism.

One of the primary functions of the Commission is to recommend the vertical devolution of taxes between the Union and State Governments and the horizontal distribution among states. This helps address regional imbalances and ensures that states have adequate resources to perform their constitutional responsibilities.

The Fifteenth Finance Commission considered factors such as population, income distance, area, forest cover, and demographic performance while determining the distribution formula. These criteria aimed to balance equity, efficiency, and fiscal needs.

The Commission also recommended grants to local bodies, disaster management funds, and sector-specific assistance to improve governance and public service delivery. Such recommendations strengthen decentralization and empower local governments.

By providing a transparent mechanism for resource allocation, the Finance Commission reduces fiscal disputes and promotes cooperative relations between different levels of government.

However, debates emerged regarding the use of the 2011 Census data and concerns among some states about resource allocation. Despite these concerns, the Commission plays an essential role in maintaining fiscal stability and strengthening India's federal structure.

Conclusion

The Fifteenth Finance Commission contributes significantly to fiscal federalism by ensuring fair distribution of resources and supporting balanced regional development. Its recommendations help strengthen cooperative federalism and improve financial governance across India