What are the different modes of transfer of funds from the centre to the state?
Answers
There are three modes of transfer of funds from the Center to the states.
the first one is The center collects certain taxes (particularly, personal income tax and excise duties) and allocates a share of the tax, proceeds to the states. In order to streamline such allocation the constitution provides for setting up of a Finance Commission every five years, which suggests criteria of such sharing’ between the Center and the states on the one hand,. and among-st different states on the other.
second one is Mode of transfer of funds from the Center to the states is the grants “and loans extended to states for implementing development plans.
The third mode of transfer of funds from the Center to the states is the grants given by central ministries to their counterparts in different states for specified projects.