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

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Evolving Centre–State Financial Relations

After the Fourteenth Finance Commission award, aggregate transfers as a percentage of gross domestic product has increased, while grants as a percentage of GDP has declined. The centre is resorting to cess and surcharges that are not shared with the states. This would mean denial of revenue to states, which goes against the spirit of the Constitution. Further, the states have a reduced untied fi scal space, with the union’s share in Centrally Sponsored Schemes in 2016–17 (BE) being reduced. Finally, in the absence of plan transfers, post 2017–18, the focus should be to develop a framework for non-fi nance commission grants to states which is predictable and certain.

Role and Functions of NITI Aayog

The architecture, engineering and management aspects of the new institution, NITI Aayog, will have to be crafted carefully, if it is to serve as an institution to impart dynamism to the developmental process in a harmonious manner. Its effectiveness will depend on how it charts out a course for itself. An important question is whether the Aayog will have influence when it does not have the power to give grants and does not have the powers to make plan allocations to different ministries and departments.

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