On financial devolution among States

Syllabus: GS-II

Subject: Polity

Topic: Federalism ,

Issue: Financial relation

Southern state have raised issue of not receiving proper share in financial devolution:

• Divisible pool of taxes are defined in article 270 of constitution divided as per recommendation of Finance Commission(Article 280)

Prelims connect( meaning of different term used in Finance Commission formula)

·         Income distance’ is the distance of a State’s income from the State with highest per capita income which is Haryana.

·          ‘Population’ is the population as per the 2011 Census.(from 15^th FC)

·         ‘Forest and ecology’ consider the share of dense forest of each State in the aggregate dense forest of all the States.

·         ‘The demographic performance’ criterion has been introduced to reward efforts made by States in controlling their population.

·         ‘Tax effort’ as a criterion has been used to reward States with higher tax collection efficiency.