{"id":16855,"date":"2025-03-21T04:20:14","date_gmt":"2025-03-20T22:50:14","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=16855"},"modified":"2025-04-04T23:46:37","modified_gmt":"2025-04-04T18:16:37","slug":"finance-commission","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/finance-commission\/","title":{"rendered":"Finance Commission"},"content":{"rendered":"<h2>Finance Commission Latest News<\/h2>\n<p>Bihar Reiterates Demand for Special Category Status Before the 16th Finance Commission<\/p>\n<h2>What is the Finance Commission?<\/h2>\n<ul>\n<li>The <strong>Finance Commission (FC)<\/strong> is a <strong>constitutional body<\/strong> established under <strong>Article 280<\/strong> of the Indian Constitution.<\/li>\n<li>It is constituted <strong>every five years<\/strong> by the <strong>President of India<\/strong>, it consists of:\n<ul>\n<li><strong>One Chairman<\/strong> (Expert in public affairs).<\/li>\n<li><strong>Four Members<\/strong> (Experts in finance, economics, and administration).<\/li>\n<\/ul>\n<\/li>\n<li>It ensures <strong>fiscal federalism<\/strong> and advises on <strong>public expenditure and economic policies<\/strong>.<\/li>\n<li><strong>16th Finance Commission: Established in 2023<\/strong>, the <strong>16th Finance Commission<\/strong> is responsible for recommending the <strong>distribution of finances <\/strong>between the <strong>Centre and States<\/strong> for the period <strong>April 1, 2026 \u2013 March 31, 2031<\/strong>.<\/li>\n<\/ul>\n<h2>Finance Commission Functions<\/h2>\n<ul>\n<li><strong>Vertical devolution<\/strong>: Determines the <strong>share of states in the central divisible pool of taxes<\/strong> (e.g., GST, income tax).<\/li>\n<li><strong>Horizontal distribution<\/strong>: <strong>Allocates funds among states<\/strong> based on fiscal needs, revenue-generating capacity, and developmental performance.<\/li>\n<li><strong>Grants-in-Aid<\/strong>: Recommends <strong>grants to revenue-deficient states<\/strong> and specific sectors in need of financial support.<\/li>\n<\/ul>\n<h2>What is Special Category Status (SCS)?<\/h2>\n<ul>\n<li><strong>Special Category Status (SCS)<\/strong> is a classification given to states to provide them with <strong>additional central assistance<\/strong> due to economic and geographic disadvantages.<\/li>\n<li>Introduced in <strong>1969<\/strong> based on the <strong>Gadgil Formula<\/strong>, recommended by the <strong>5th Finance Commission (Mahavir Tyagi)<\/strong>.<\/li>\n<li>Initially granted to <strong>Assam, Jammu &amp; Kashmir, and Nagaland<\/strong>.<\/li>\n<\/ul>\n<h2>Criteria for Special Category Status (Based on Gadgil Formula)<\/h2>\n<p><strong>A state must have:<\/strong><\/p>\n<ul>\n<li>Hilly and difficult terrain.<\/li>\n<li>Low population density and\/or a significant tribal population.<\/li>\n<li>Strategic location along international borders.<\/li>\n<li>Economic and infrastructural backwardness.<\/li>\n<li>Non-viable state finances.<\/li>\n<\/ul>\n<h2>Evolution and States with SCS<\/h2>\n<ul>\n<li>Initially given to <strong>three states (1969)<\/strong> and later expanded.<\/li>\n<li>Currently, <strong>11 states<\/strong> have SCS:\n<ul>\n<li><strong>Northeast states<\/strong>: Assam, Nagaland, Manipur, Meghalaya, Tripura, Arunachal Pradesh, Mizoram, and Sikkim.<\/li>\n<li><strong>Hilly states<\/strong>: Himachal Pradesh and Uttarakhand.<\/li>\n<li><strong>Telangana<\/strong> (Granted due to bifurcation from Andhra Pradesh).<\/li>\n<\/ul>\n<\/li>\n<li><strong>States demanding SCS<\/strong>: Andhra Pradesh, Bihar, Odisha.<\/li>\n<\/ul>\n<h2>Benefits of Special Category Status (SCS)<\/h2>\n<ul>\n<li><strong>Higher Central Assistance<\/strong>:\n<ul>\n<li><strong>90% of funds as grants<\/strong> and <strong>10% as loans<\/strong> for <strong>Centrally Sponsored Schemes (CSS)<\/strong>.<\/li>\n<li>Non-SCS states get only <strong>30% grants and 70% loans<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Special plan assistance<\/strong>: Funding for projects of special importance.<\/li>\n<li><strong>Non-lapsable funds<\/strong>: Unspent funds <strong>do not lapse<\/strong> at the end of the financial year.<\/li>\n<li><strong>Tax concessions<\/strong>: Special tax incentives (though many have been subsumed under <strong>GST<\/strong>).<\/li>\n<\/ul>\n<h2>Finance Commission FAQs<\/h2>\n<p><strong>Q1. <\/strong>What is the Finance Commission (FC)?<\/p>\n<p><strong>Ans.<\/strong> The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution to recommend the distribution of financial resources between the Centre and States.<\/p>\n<p><strong>Q2. <\/strong>How often is the Finance Commission constituted?<\/p>\n<p><strong>Ans.<\/strong> The Finance Commission is constituted every five years or at an earlier time as deemed necessary by the President of India.<\/p>\n<p><strong>Q3. <\/strong>Who appoints the Finance Commission?<\/p>\n<p><strong>Ans.<\/strong> The President of India appoints the Finance Commission.<\/p>\n<p><strong>Q4. <\/strong>What is the composition of the Finance Commission?<\/p>\n<p><strong>Ans.<\/strong> The Commission consists of a Chairman and four other members appointed by the President. The qualifications and selection criteria are set by Parliament.<\/p>\n<p><strong>Q5. <\/strong>What is the latest Finance Commission?<\/p>\n<p><strong>Ans.<\/strong> The 15th Finance Commission (2021-26), chaired by N.K. Singh, submitted its report in 2020.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.ptinews.com\/story\/national\/bihar-raises-special-status-demand-before-16th-finance-commission\/2390068\" target=\"_blank\" rel=\"nofollow noopener\">PTI<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Finance Commission (FC) is a constitutional body established under Article 280 of the Indian Constitution. It is constituted every five years by the President of India.<\/p>\n","protected":false},"author":5,"featured_media":16856,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-16855","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/16855","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=16855"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/16855\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/16856"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=16855"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=16855"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=16855"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}