| Syllabus: GS-II; Subject: Polity; Topic: Federalism. Issue: Financial devolution. |
Context: Asymmetric fiscal rules in Kerala spark wider debate on Centre-State finance relations.
ConcernsCConcerns:
- Discussion focuses on debt-deficit dynamics, crucial in Centre-State financial relations.
- Volatility in intergovernmental fiscal transfers.
- Fifteenth Finance Commission’s tax transfer formula raises debate on equity versus efficiency.
- Negotiations with Sixteenth Finance Commission critical for specific-purpose transfers addressing State-specific issues.
Prelims Connect:(Institutions in news)
|  Finance Commission:ü Constitutional body advising on tax revenue distribution among Union and States.
ü Constituted by the President under Article 280 of the Constitution. ü Mandated to recommend: o  Distribution of tax proceeds between Union and States. o  Principles for grants-in-aid to States from Consolidated Fund. o  Measures to enhance State resources for local bodies. o  Other financial matters referred by the President. ü Composition: A Chairman and four members appointed by the President. ü Tenure determined by the President, with eligibility for reappointment. ü Recommendations not binding on the government. |
