{"id":17187,"date":"2023-11-23T08:02:03","date_gmt":"2023-11-23T08:02:03","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=17187"},"modified":"2024-02-01T16:16:37","modified_gmt":"2024-02-01T16:16:37","slug":"how-have-the-recommendations-of-the-14th-finance-commission-of-india-enabled-the-states-to-improve-their-fiscal-position-150-words-10-marks","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/how-have-the-recommendations-of-the-14th-finance-commission-of-india-enabled-the-states-to-improve-their-fiscal-position-150-words-10-marks\/","title":{"rendered":"How have the recommendations of the 14th Finance Commission of India enabled the states to improve their fiscal position? (150 Words 10 Marks)"},"content":{"rendered":"<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-gs-advance-and-mentorship-program-ampcsat?utm_source=Blog&amp;utm_medium=Link&amp;utm_campaign=GS+Advanced\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1280\" height=\"300\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8.png\" alt=\"\" class=\"wp-image-43397\" srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8-585x137.png 585w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/a><\/figure><\/div>\n\n\n<p>The 14th Finance Commission&#8217;s recommendations transformed India&#8217;s fiscal landscape by increasing the states&#8217; share of central taxes to 42%, empowering them with greater financial autonomy. This bolstered state budgets, enabling investments in crucial sectors and enhancing fiscal management. The decentralized approach aimed to address regional disparities and foster overall economic development.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong>UPSC Mains General Studies Paper \u2013 2 Mains 2021<\/strong><\/p><\/blockquote>\n\n\n\n<p><a href=\"https:\/\/edukemy.com\/blog\/upsc-mains-civil-services-ias-exam-question-paper-2021\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>UPSC Mains Civil Services IAS Exam Question Paper \u2013 2021<\/strong><\/a><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-6a15c67f711a3\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a15c67f711a3\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/how-have-the-recommendations-of-the-14th-finance-commission-of-india-enabled-the-states-to-improve-their-fiscal-position-150-words-10-marks\/#Approach\" title=\"Approach&nbsp;&nbsp;&nbsp;&nbsp;\">Approach&nbsp;&nbsp;&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/edukemy.com\/blog\/how-have-the-recommendations-of-the-14th-finance-commission-of-india-enabled-the-states-to-improve-their-fiscal-position-150-words-10-marks\/#Answer\" title=\"Answer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\">Answer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/edukemy.com\/blog\/how-have-the-recommendations-of-the-14th-finance-commission-of-india-enabled-the-states-to-improve-their-fiscal-position-150-words-10-marks\/#Introduction\" title=\"Introduction&nbsp;&nbsp;&nbsp;&nbsp;\">Introduction&nbsp;&nbsp;&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/edukemy.com\/blog\/how-have-the-recommendations-of-the-14th-finance-commission-of-india-enabled-the-states-to-improve-their-fiscal-position-150-words-10-marks\/#Body\" title=\"Body&nbsp;&nbsp;&nbsp;\">Body&nbsp;&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/edukemy.com\/blog\/how-have-the-recommendations-of-the-14th-finance-commission-of-india-enabled-the-states-to-improve-their-fiscal-position-150-words-10-marks\/#Conclusion\" title=\"Conclusion&nbsp;&nbsp;&nbsp;&nbsp;\">Conclusion&nbsp;&nbsp;&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/edukemy.com\/blog\/how-have-the-recommendations-of-the-14th-finance-commission-of-india-enabled-the-states-to-improve-their-fiscal-position-150-words-10-marks\/#In_case_you_still_have_your_doubts_contact_us_on_9811333901\" title=\"In case you still have your doubts, contact us on 9811333901.&nbsp;\">In case you still have your doubts, contact us on 9811333901.&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/edukemy.com\/blog\/how-have-the-recommendations-of-the-14th-finance-commission-of-india-enabled-the-states-to-improve-their-fiscal-position-150-words-10-marks\/#Visit_our_YouTube_Channel_%E2%80%93_here\" title=\"Visit our YouTube Channel &#8211;&nbsp;here\">Visit our YouTube Channel &#8211;&nbsp;here<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Approach\"><\/span>Approach&nbsp;&nbsp;&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>Start with a brief&nbsp; intro to the finance commission with the context of constitutional provision related to it.&nbsp;<\/li><li>Discuss how the 14th Finance Commission enabled the States to improve their fiscal position.&nbsp;<\/li><li>Conclusion accordingly.&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Answer\"><\/span>Answer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span>Introduction&nbsp;&nbsp;&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>The Finance Commission is a constitutional body specifically designed to tackle vertical and horizontal imbalances in India&#8217;s federal finances. It plays a crucial role in addressing fiscal disparities and ensuring equitable distribution of resources among the different levels of government in the country. The Fourteenth Finance Commission was established in 2013 by the President of India under Article 280 of the Constitution. Its primary objective was to make recommendations for the period 2015-20. Dr. Y. V. Reddy was appointed as the Chairman of the Commission.&nbsp;&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Body\"><\/span>Body&nbsp;&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The 14th Finance Commission enabled the States to improve their fiscal position: <\/strong>The 14th Finance Commission proposed several important recommendations that aimed to enhance the fiscal autonomy and decision-making powers of the states in India. Some key recommendations are as follows:&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>Share in Centre&#8217;s Divisible Pool:<\/strong> The Commission recommended increasing the share of states in the Center&#8217;s divisible tax pool from the current 32% to 42%. This significant increase provides states with greater autonomy in determining their expenditure priorities.\u00a0<\/li><li><strong>Centrally Sponsored Schemes: <\/strong>The Commission suggested delinking eight centrally sponsored schemes from support provided by the central government. This move grants states higher fiscal responsibility and greater autonomy in implementing development initiatives.\u00a0<\/li><li><strong>Taxation: <\/strong>The Commission emphasized tax devolution as the primary source of fund transfers to states. This approach increases the flow of unconditional transfers, giving states more flexibility in their spending decisions.\u00a0<\/li><li><strong>Grants:<\/strong> The Commission proposed various transfers, including grants for rural and urban local bodies, performance grants, and grants for disaster relief and revenue deficit. These transfers amount to approximately 5.3 lakh crore for the period of 2015-20.\u00a0<\/li><li><strong>Compensation: <\/strong>The Commission recommended full compensation to states for a period of three years in case of revenue loss following the implementation of the Goods and Services Tax (GST). It suggested 100% compensation in the first, second, and third years, 75% in the fourth year, and 50% in the fifth and final year. The Commission also recommended the establishment of an autonomous and independent GST compensation fund through legislative actions.\u00a0<\/li><\/ol>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/UPSC-Essay-Course-1280\u00d7300-1-3.svg\" alt=\"\" class=\"wp-image-42688 lazyload\" width=\"781\" height=\"182\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 781px; --smush-placeholder-aspect-ratio: 781\/182;\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;&nbsp;&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>Hence, The recommendations of the Finance Commission will bring about significant reforms in state finances, particularly considering the unsustainable levels of fiscal deficit in state governments. These recommendations will empower states with greater autonomy in determining their expenditure priorities, further strengthening the concept of &#8220;balancing wheel of fiscal federalism.&#8221;&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_case_you_still_have_your_doubts_contact_us_on_9811333901\"><\/span><strong>In case you still have your doubts, contact us on 9811333901.<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p>For Daily Updates and Study Material:<\/p>\n\n\n\n<p>Join our Telegram Channel &#8211;&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>1. 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Mains Answer Writing Practice &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3mZuVxl\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Visit_our_YouTube_Channel_%E2%80%93_here\"><\/span>Visit our YouTube Channel &#8211;&nbsp;<a href=\"https:\/\/www.youtube.com\/@ShabbirsEduKemyforIAS\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>The 14th Finance Commission&#8217;s recommendations transformed India&#8217;s fiscal landscape by increasing the states&#8217; share of central taxes to 42%,<\/p>\n","protected":false},"author":17,"featured_media":17197,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[1500],"tags":[186,299,354,142,232,145,353],"class_list":["post-17187","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-upsc-mains-solved-paper-gs-2","tag-general-studies-1","tag-geography-general-studies","tag-history","tag-previous_year_questions","tag-upsc","tag-upsc-mains-question-paper","tag-upsc-model-answers"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/17187","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/comments?post=17187"}],"version-history":[{"count":3,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/17187\/revisions"}],"predecessor-version":[{"id":24801,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/17187\/revisions\/24801"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media\/17197"}],"wp:attachment":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media?parent=17187"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/categories?post=17187"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/tags?post=17187"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}