Q 14. भारत में नियोजित विकास के संदर्भ में केन्द्र राज्य वित्तीय संबंधों के विकसित हो रहे स्वरूप (पैटर्न) का परीक्षण कीजिए। हाल के सुधारों ने भारत में राजकोषीय संघवाद को कितना प्रभावित किया है? (UPSC 2025,15 Marks,250 Words)

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The evolving pattern of Centre-State financial relations in India, particularly in the context of planned development, reflects a dynamic interplay of fiscal policies and reforms. Influenced by thinkers like K.C. Wheare, who emphasized cooperative federalism, recent reforms such as the Goods and Services Tax (GST) have reshaped fiscal federalism. Data from the 15th Finance Commission highlights increased devolution of funds to states, aiming to balance autonomy with national priorities, thereby impacting the fiscal landscape significantly.

Evolving Pattern of Centre-State Financial Relations
  ● Constitutional Framework:  
        ○ The financial relations between the Centre and States in India are primarily governed by the Constitution of India, which delineates the distribution of taxation powers and revenue-sharing mechanisms.
    ● Article 280 provides for the establishment of the Finance Commission to recommend the distribution of taxes between the Centre and the States.  
  ● Planned Development Era:  
        ○ During the era of Five-Year Plans, the Centre played a dominant role in financial planning and resource allocation, with the Planning Commission (now replaced by NITI Aayog) being a central body for plan formulation and fund distribution.
        ○ States were largely dependent on the Centre for plan assistance, which was often tied to specific projects and schemes.
  ● Finance Commissions:  
        ○ Successive Finance Commissions have played a crucial role in recommending the distribution of the divisible pool of taxes. For instance, the 14th Finance Commission increased the States' share of the central tax pool from 32% to 42%, enhancing fiscal autonomy.
 Impact of Recent Reforms on Fiscal Federalism
  ● Goods and Services Tax (GST):  
        ○ The introduction of GST in 2017 marked a significant shift in Centre-State financial relations by subsuming multiple indirect taxes into a single tax, thereby creating a unified national market.
        ○ The GST Council, a federal body with representation from both the Centre and States, was established to make decisions on GST rates and policies, promoting cooperative federalism.
  ● Abolition of Planning Commission:  
        ○ The replacement of the Planning Commission with NITI Aayog in 2015 shifted the focus from a top-down approach to a more collaborative model of governance, emphasizing cooperative and competitive federalism.
  ● Increased Devolution and Grants:  
        ○ The 15th Finance Commission recommended maintaining the States' share in central taxes at 41%, while also suggesting performance-based grants and sector-specific allocations to address regional disparities.
  ● Centrally Sponsored Schemes (CSS):  
        ○ Reforms in CSS have aimed at rationalizing the number of schemes and increasing flexibility for States to tailor schemes according to local needs, thereby enhancing fiscal autonomy.
  ● Challenges and Criticisms:  
        ○ Despite reforms, issues such as delayed GST compensation, centralization tendencies, and the imposition of centrally designed schemes continue to pose challenges to fiscal federalism.
        ○ States often express concerns over the adequacy and timeliness of fund transfers, impacting their fiscal health and development priorities.
 Examples and Data
  ● 14th Finance Commission: Increased States' share in central taxes to 42%, significantly enhancing their fiscal capacity.  
  ● GST Compensation: States have faced challenges with delayed compensation payments, impacting their revenue stability.  
  ● NITI Aayog Initiatives: Programs like Aspirational Districts Programme aim to improve socio-economic indicators in underdeveloped regions, reflecting a shift towards more targeted interventions.  
 These points highlight the dynamic nature of Centre-State financial relations in India, shaped by constitutional provisions, planned development, and recent reforms, with ongoing challenges in achieving balanced fiscal federalism.

The evolving pattern of Centre-State financial relations in India reflects a shift towards greater fiscal autonomy for states, driven by reforms like the Goods and Services Tax (GST) and increased devolution of taxes. However, challenges persist, such as disparities in resource distribution. Dr. B.R. Ambedkar emphasized the need for balanced federalism, stating, "States are the laboratories of democracy." Moving forward, enhancing cooperative federalism and ensuring equitable resource allocation are crucial for sustainable development.