Third-Tier Government in the Inter-Governmental Fiscal Transfer Framework
The author discusses the treatment of third-tier government under the overall fiscal transfer mechanism provided in the Constitution of India, more specifically under the four successive Finance Commissions. The chapter brings out the inherent infirmities
- PDF / 275,076 Bytes
- 34 Pages / 419.528 x 595.276 pts Page_size
- 89 Downloads / 166 Views
Constitutional Framework and Inherent Infirmities Article 280 under which Finance Commissions are constituted has been amended under the 73rd and 74th Amendments to the Constitution and introduced two new sub-clauses (bb) and (c) in clause 3. These sub- clauses make it obligatory upon the National Finance Commission (NFC) to recommend “the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats/Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State”: sub-clause (bb) relates to panchayats while sub-clause (c) relates to municipalities. Part IX requires the governor of a state to constitute “within one year from the commencement of the Constitution (Seventy-third) Amendment Act, 1992 and thereafter at the expiration of every fifth year” a Finance Commission “to review the financial position of the Panchayats and to make recommendations to the Governor” in regard to
© The Author(s) 2018 A. Sarma, D. Chakravarty, Integrating the Third Tier in the Indian Federal System, https://doi.org/10.1007/978-981-10-5625-3_7
123
124
7 Third-Tier Government in the Inter-Governmental Fiscal...
(a) The principles that should govern: (1) the distribution of net proceeds of state taxes, duties, tolls and fees between the state and panchayats and the allocation of shares between all levels of the latter; (2) the determination of the taxes, duties, tolls and fees that can be assigned to, or appropriated by, the panchayats, and the aid grants to the panchayats from the state’s Consolidated Fund. (b) The measures needed to augment the financial position of the panchayats. (c) Any other matter referred to by the governor in the interest of the sound finance of the panchayats. It looks as if the inclusion of the two sub-clauses (bb) and (c) in Article 280 and linking Article 243 I has sought to integrate the fiscal relations between the three levels of government—union, state and third-tier g overnment, that is panchayat/municipality in the Indian federal system. However, four successive Finance Commissions (Eleven to Fourteen) while deliberating on the operational implications of the two new sub- clauses in Clause 3 of Article 280 have highlighted several limitations on their making recommendations according to the word and spirit of the constitutional provisions. These have essentially emanated from the manner in which most state governments have implemented the constitutional provisions under the 73rd and 74th Amendments. The NFCs are required to make their recommendations as per the sub- clauses (bb) and (c) in Article 280 (3) on the basis of the recommendations of the respective State Finance Commission (SFC). But the NFCs have found that the period covered by the reports of the SFC and that of their own lacks synchronization. The provision under Article 243 I for the constitution of an SFC “at the expiration of every fifth year” prohibits such constitution before the completion of the period of five years. This provisi
Data Loading...