Question Q11Examine the factorsGS2GS2

In what ways are the terms of reference of the 16th Finance Commission different from that of the previous Finance Commissions? Despite increasingly progressive devolution by subsequent Finance Commissions, examine the factors propel economic disparities across various States. (15 marks, 250 words)

Introduction

16th Finance Commission has been setup by the President under Article 280 of the Indian constitution. Provid Panagariya as its chairman have to provide the formula for distribution of taxes for the period 2026-2031.

34 words

Main Body

Terms of Reference of 16th Finance Commission:

To derive the formula for :

vertical devolution of taxes between central and state.

horizontal distribution of taxes between the states

To provide the suggestion on ways to augment the consolidated fund of state

Grants-in-aids to certain states.

Funds to the Disaster Management Fund.

These items are different from Previous Finance Commissions :-

Do not specifically mentioned for providing funds for healthcare and education

funds are not tied to any reforms by the state

funds to local government not mentioned

Previous Finance Commissions:

5th Finance Commission - Allotment of funds to some states categorised as special category states

14th Finance Commission - Increased vertical devolution from ~32/. to 42/. and SCS under status was no longer used.

15th Finance Commission - 41/. vertical devolution and 17. to newly created UT of Jammu and Kashmir

Funds to the Disaster Management Fund.

These items are different from Previous Finance Commissions :-

Do not specifically mentioned for providing funds for healthcare and education

funds are not tied to any reforms by the state

funds to local government not mentioned

Previous Finance Commissions

5th Finance Commission - Allotment of funds to some states categorised as special category states

14th Finance Commission - Increased vertical devolution from ~32/. to 42/. and SCS under status was no longer used.

15th Finance Commission - 41/. vertical devolution and 17. to newly created UT of Jammu and Kashmir

— Aditya Agarwal

250 words11 paragraphs

Clear enumeration of TORs of 16th Finance Commission
Specific mention of chairman (Provid Panagariya)
Historical comparison with 5th, 14th, and 15th Finance Commissions
Mentions specific percentage changes in vertical devolution
Identifies key differences (no specific healthcare/education mention, reforms not tied, local government not mentioned)

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Topper

Aditya Agarwal

2024

Subject & Paper

GS2GS2

Topic

Finance Commission and Federal Devolution

16th Finance Commission Terms of Reference

Changes in TORs across Finance Commissions

Writing Stats

284

Total words

Paragraphs

Technical and structured

Tone

Linked PYQ

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