Outline the constitutional basis of fiscal federalism in India. Describe how revenue and expenditure powers are allocated between the Union and the States. Assess the implications of this allocation for State fiscal autonomy.
Kartavya Desk Staff
Topic: Devolution of powers and finances up to local levels and challenges therein.
Topic: Devolution of powers and finances up to local levels and challenges therein.
Q4. Outline the constitutional basis of fiscal federalism in India. Describe how revenue and expenditure powers are allocated between the Union and the States. Assess the implications of this allocation for State fiscal autonomy. (15 M)
Difficulty Level: Easy
Reference: IE
Why the question Fiscal federalism lies at the core of India’s constitutional architecture and has gained renewed salience amid debates on State fiscal autonomy, centralised welfare financing, and evolving Centre–State financial relations. Key Demand of the question The question requires outlining the constitutional framework of fiscal federalism, explaining how revenue and expenditure powers are divided between the Union and the States, and assessing the implications of this arrangement for State fiscal autonomy. Structure of the Answer Introduction Introduce fiscal federalism as a constitutional mechanism for managing financial relations in a federal polity, highlighting its role in balancing a strong Union with autonomous States. Body Constitutional foundations of fiscal federalism, including financial provisions and institutional mechanisms. Nature of revenue authority and expenditure responsibility allocation between the Union and the States. Effects of this allocation on State fiscal autonomy, decision-making space, and Centre–State fiscal equilibrium. Conclusion Conclude by linking effective fiscal federalism to cooperative governance, constitutional balance, and long-term federal stability.
Why the question
Fiscal federalism lies at the core of India’s constitutional architecture and has gained renewed salience amid debates on State fiscal autonomy, centralised welfare financing, and evolving Centre–State financial relations.
Key Demand of the question
The question requires outlining the constitutional framework of fiscal federalism, explaining how revenue and expenditure powers are divided between the Union and the States, and assessing the implications of this arrangement for State fiscal autonomy.
Structure of the Answer
Introduction Introduce fiscal federalism as a constitutional mechanism for managing financial relations in a federal polity, highlighting its role in balancing a strong Union with autonomous States.
• Constitutional foundations of fiscal federalism, including financial provisions and institutional mechanisms.
• Nature of revenue authority and expenditure responsibility allocation between the Union and the States.
• Effects of this allocation on State fiscal autonomy, decision-making space, and Centre–State fiscal equilibrium.
Conclusion Conclude by linking effective fiscal federalism to cooperative governance, constitutional balance, and long-term federal stability.