ECONOMIC AND POLITICAL WEEKLY - ‘Uncooperative’ Federalism
‘Uncooperative’ Federalism The 15th Finance Commission’s Terms of Reference need moderation, or else states will lose fiscal powers. The Finance Commission is a constitutional body, an independent arbiter of resources between the union and the states. The core mandate of the commission is to divide union taxes in a way that enables the union and the states to perform their respective expenditure responsibilities defined in the 7th Schedule of the Constitution of India. Finance commissions in the past had performed this role admirably, and as an institution it earned tremendous respect among all stakeholders. One of the major strengths of India’s federal fiscal structure is an independent finance commission and the role it has played in strengthening federalism in this country. The commission’s mandate is defined by its “Terms of Reference” (ToR). The 15th Finance Commission’s (XV-FC) ToR have raised serious apprehensions among states. Apart from the controve...