Roadmap for Answer Writing Introduction Briefly introduce the CAG and its constitutional basis. State the assertion that it is the most significant office for ensuring financial accountability and transparency. Significance of the CAG Highlight Dr. B.R. Ambedkar’s perspective on the CAG’s role. Explain the independence of ...
Model Answers The Role of the Finance Commission in Regulating Financial Relationships between the Union and States in India The Finance Commission, established under Article 280 of the Indian Constitution, plays a crucial role in maintaining fiscal federalism in India. Its primary responsibilitiesRead more
Model Answers
The Role of the Finance Commission in Regulating Financial Relationships between the Union and States in India
The Finance Commission, established under Article 280 of the Indian Constitution, plays a crucial role in maintaining fiscal federalism in India. Its primary responsibilities include evaluating the financial state of the Union and state governments, recommending tax sharing, and determining the principles for grants-in-aid to states.
Key Functions
- Vertical Devolution: The Commission recommends the distribution of net tax proceeds between the Union and states, ensuring an equitable allocation.
- Horizontal Devolution: It also allocates the respective shares among the states, promoting fairness and equity.
- Grants-in-Aid: The Commission determines the principles governing grants-in-aid from the Consolidated Fund of India to states, ensuring financial support where needed.
- Five-Year Cycle: The recommendations are reviewed every five years, allowing for adjustments based on evolving economic conditions and state needs.
- Legal Powers: With the authority of a civil court, the Commission can summon witnesses and demand documents, enhancing its ability to gather information.
Challenges
Despite its pivotal role, the Finance Commission faces challenges, including:
- Census Basis for Allocation: The reliance on the 2011 census for resource allocation may disadvantage states with lower population growth (Source: 15th Finance Commission report).
- Nature of Transfers: Changes in the nature of fund transfers can create instability in state finances, as seen after the 14th Finance Commission’s recommendations.
- Demand for Permanency: The need for a permanent Finance Commission is emphasized due to varying approaches to tax devolution, particularly following the implementation of GST.
In conclusion, the Finance Commission is vital for balancing financial relationships between the Union and states, ensuring equitable distribution of resources, and addressing the evolving needs of Indian federalism.
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Model Answers The Significance of the CAG in India's Constitution The Comptroller and Auditor General (CAG) of India, established under Article 148 of the Constitution, plays a vital role in maintaining financial accountability and transparency within the government. Dr. B.R. Ambedkar recognized theRead more
Model Answers
The Significance of the CAG in India’s Constitution
The Comptroller and Auditor General (CAG) of India, established under Article 148 of the Constitution, plays a vital role in maintaining financial accountability and transparency within the government. Dr. B.R. Ambedkar recognized the importance of this office, asserting it to be one of the most significant under the Constitution.
Auditing Responsibilities
The CAG is tasked with auditing the financial transactions of both central and state governments, including public sector undertakings. This auditing ensures compliance with laws and regulations, safeguarding public funds and promoting lawful expenditure (Source: Constitution of India).
Executive Accountability
Through its reports, the CAG holds the Executive accountable to Parliament. These reports inform legislative bodies about the government’s financial management, serving as a critical resource for lawmakers and the public alike (Source: CAG Annual Reports).
Resource Efficiency
The CAG also evaluates whether government expenditures are legally authorized and effectively utilized. It assesses the economy, efficiency, and effectiveness of public spending, highlighting any wastefulness in financial administration (Source: CAG Performance Audits).
In summary, the CAG’s independent oversight fosters a culture of financial accountability and transparency, reinforcing the democratic framework of governance in India.
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