ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

POLITICS-Shortsighted Manoeuvres

Constitution assigns to the states, And unless - there is a body that reviews the centre's encroachment of the states' powers and functions, the Eleventh Finance Commission's review as mandated may not go very far. The chairman of the new commission is already reported to have spoken of both the centre and the states being on the erring side in the matter of populism and urging legitimate taxation and efficient pricing of services, These observations are certainly not without much substance. But the point is whether it is not the prevailing system of federal financial relations that encourages resort to what he considers as irrational pricing. The real problem lies in the basic financial system under which the centre has excessive command over financial powers, be it taxation or borrowing, whereas the state governments are hamstrung in this regard. There cannot be a budgetary balance at the state level unless and until the states are restored financial powers that match the functions they have to undertake under the Constitution. The new Finance Commission's chairman must not delude himself into thinking that he can come up with a magic formula for restoring budgetary balance without setting right the basic anomaly in the Indian federal financial system. And this task may well be outside the purview of his commission.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Back to Top