Journal Press India^®

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Though the Constitution creates a dual polity based on division of governmental powers, this division is not watertight. Recognising the fact that the financial resources of the States may prove inadequate for undertaking development activities, the framers of India’s Constitution have made elaborate arrangements relating to flow of funds from the Centre to the States. One of the most important ways of effecting this transfer is through the Finance Commission. This paper focuses on the recommendations of the Fourteenth Finance Commission (FFC) which are likely to have major implications for Center-State relations, for budgeting by, and the fiscal situation of, the Centre and the States. The FFC has made far-reaching changes in tax devolution that will move the country toward greater fiscal federalism, conferring more fiscal autonomy on the states.

Keywords

Centre-state financial relations, Finance Commission, Fiscal discipline, Fourteenth Finance Commission

1. Administrative Reforms Commission (1968), Report of the Study Team on Centre-State Relationships, Vol. I.
2. Report of the Sixth Finance Commission, (1973).