Q3. Discuss the Role of Finance Commission in India's fiscal federalism.
Answers
In India, the Finance Commission and the Planning Commission promote fiscal federalism by carrying out systemic fiscal transfers in the nature of devolution or conditional ones but with the replacement of Planning Commission by NITI Aayog there is an urgent need for revisiting and redefining the fiscal architecture
Answer:
The Finance Commission is a Constitutionally mandated body that is at the centre of fiscal federalism. ... Its working is characterised by extensive and intensive consultations with all levels of governments, thus strengthening the principle of cooperative federalism.
Explanation:
Each Finance Commission is required to make recommendations on: (i) sharing of central taxes with states, (ii) distribution of central grants to states, (iii) measures to improve the finances of states to supplement the resources of panchayats and municipalities, and (iv) any other matter referred to it.