{"id":250180,"date":"2023-06-30T20:10:33","date_gmt":"2023-06-30T14:40:33","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=250180"},"modified":"2023-08-31T15:01:58","modified_gmt":"2023-08-31T09:31:58","slug":"fiscal-federalism-needs-a-look-in-by-the-16th-finance-commission","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/fiscal-federalism-needs-a-look-in-by-the-16th-finance-commission\/","title":{"rendered":"Fiscal federalism needs a look-in by the 16th Finance Commission"},"content":{"rendered":"\n<p><strong>Source<\/strong>&#8211; The post is based on the article <strong>\u201cFiscal federalism needs a look-in by the 16th Finance Commission\u201d <\/strong>published in <strong>live Mint<\/strong> on <strong>30<\/strong><strong>th June 2023<\/strong>.<\/p>\n<p><strong>Syllabus: <\/strong>GS2-Fiscal Federalism<\/p>\n<p><strong>Relevance:<\/strong> Appointment of The Sixteenth Finance Commission (16th FC)<\/p>\n<p><strong>News- <\/strong>The soon-to-be-appointed 16<sup>th<\/sup> Finance Commission will have to tackle problems in Centre-state relations ,solve issues of centralization and delegation of funds to lower levels.<\/p>\n<h2><strong>What are the challenging issues in Fiscal Federalism?<\/strong><\/h2>\n<p><strong>First,<\/strong> there is the<strong> intersecting<\/strong> <strong>domain of the Finance Commission and Goods and<\/strong> <strong>Services Tax (GST) Council<\/strong>. The latter\u2019s decisions impact the own tax revenue flows of states and, more importantly, the size of the central tax revenue pool .<\/p>\n<p><strong>Second<\/strong>, the demands fo<strong>r greater centralization of<\/strong> <strong>expenditure<\/strong> assignment is another issue. India has a quasi-federal system. For purposes of legislation, regulation and administration, Schedule 7 of the Constitution assigns \u00a047 subjects to the Concurrent List.<\/p>\n<p><strong>Third<\/strong>, there is the<strong> issue of externalities<\/strong>. If social benefits or losses can spill over across boundaries of a lower-level jurisdiction, it requires assignment of the subject to a higher-level jurisdiction with wider spatial coverage.<\/p>\n<p><strong>Fourth<\/strong><strong> is the third tier of government<\/strong>.where it is left to the states to decide what functions from the state list in the 7th schedule should be further delegated and assigned to local governments.<\/p>\n<p>Finally, <strong>equity<\/strong> <strong>considerations<\/strong> may require greater centralization to enable the provision of comparable levels of public or merit services for all citizens in a country.<\/p>\n<h2><strong>What is Way forward?<\/strong><\/h2>\n<p>Most of these problems haven been sorted out and GST has now emerged as a large and buoyant source of revenue for both the Centre and states.<\/p>\n<p><strong>Vijay Kelkar, chairman of the<\/strong> <strong>13th FC<\/strong>, suggested that <strong>consolidated funds <\/strong>should be created for PRIs and ULBs, funded by earmarking a share of the central GST and state GST for them.<\/p>\n<p>The capacity of local-level institutions should be strengthened<\/p>\n<p>A change in the assignment of subjects under schedule 7, whether towards greater centralization or greater decentralization, will entail <strong>constitutional amendments<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source&#8211; The post is based on the article \u201cFiscal federalism needs a look-in by the 16th Finance Commission\u201d published in live Mint on 30th June 2023. Syllabus: GS2-Fiscal Federalism Relevance: Appointment of The Sixteenth Finance Commission (16th FC) News- The soon-to-be-appointed 16th Finance Commission will have to tackle problems in Centre-state relations ,solve issues of&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/fiscal-federalism-needs-a-look-in-by-the-16th-finance-commission\/\">Continue reading <span class=\"screen-reader-text\">Fiscal federalism needs a look-in by the 16th Finance Commission<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[212,10501,225],"class_list":["post-250180","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-2","tag-live-mint","tag-polity","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/250180","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=250180"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/250180\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=250180"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=250180"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=250180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}