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QUESTION 14
GS2
15 marks

Examine the evolving pattern of Centre-State financial relations in the context of planned development in India. How far have the recent reforms impacted the fiscal federalism in India?

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11 min
250 words

What the examiner wants

Examine how Centre–State finances changed from the planning era to now, and how far recent reforms affected fiscal federalism.

ExamineGo into the details, test each point against evidence, and conclude on what it shows.

Demand-wise check

  1. 1Planning era: Planning Commission grants (Gadgil formula) alongside Finance Commission transfers≈65 words
  2. 2Recent reforms: NITI Aayog (2015), 14th FC raised devolution to 42%, 15th FC 41%, GST (2017), end of GST compensation (2022), cesses and surcharges, borrowing limits, special assistance for capital expenditure≈65 words
  3. 3Impact: more untied funds but less fiscal autonomy; disputes (Kerala v Union on borrowing)≈65 words

Open in about 30 words and close in about 30.

Answer plan

Planning eraPost-2014 reformsImpact on autonomyDisputesConclusion

Where marks usually go

  • Not covering the planning era
  • No figures on devolution

Draw this

  • Timeline with devolution percentages

Value addition

  • DataThe 14th Finance Commission raised states' share of the divisible pool from 32% to 42%; the 15th set it at 41%.Finance Commission reports
  • CaseState of Kerala v. Union of India (2024) on borrowing limits was referred to a Constitution Bench.Supreme Court of India, 2024

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