Question Q.14GS2GS2
Q.14) How is the 'vertical' and 'horizontal' devolution of taxes to the states decided? Highlighting the concerns raised by some states regarding the devolution of taxes, suggest corrective measures.
Main Body
In line with the principle of democratic fiscal devolution, the Finance Commission was established to always the funds from centre to state (ARTICLE 280)
Methodology of Devolution:
Central pool of taxes is distributed away states (4:1) according to the Srivari Commission based on the formula (Vertical):
1Demographic performance | 12.0% | 1F1. 1F4.
2Population | 15%.
3Area of state | 1F4.
4Income distance | 45%.
5Forest and ecology | 10%.
6Tax and fiscal effort | 2-5
Horizontal/Vertical distribution = 100%
— Deeksha Chourasiya · AIR 44
86 words4 paragraphs
Answer continues on next page
Steal this copy's techniques PremiumAI pulls out the reusable moves — pick the ones you want as flashcards
Topper
Deeksha Chourasiya
AIR 442025
Subject & Paper
GS2GS2
Topic
Federal Structure - Functions, Responsibilities, Devolution of Powers and Finances
Centre-State Financial Relations
Vertical and horizontal devolution of taxes
Writing Stats
86
Total words
4
Paragraphs