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9 May 2024 : PIB Summary for UPSC

1. Sixteenth Finance Commission (XVIFC) invites suggestions/views from general public, institutions and organisations on issues related to its terms of reference

Topic: GS2 – Indian Polity – Constitutional Bodies
Context
●  The Sixteenth Finance Commission (XVIFC), chaired by Dr. Arvind Panagariya, has been established to make recommendations for a five-year period starting April 1, 2026.

●  The commission invites suggestions and views from the public, organisations, and individuals on the specified terms of reference and its general approach.

 Analysis of the news:

  • The Sixteenth Finance Commission (XVIFC) has been established with Dr. Arvind Panagariya as Chairman, tasked with making recommendations for a five-year period starting April 1, 2026.
  • Its primary responsibilities include:
    • Distributing the net proceeds of taxes between the Union and the States as per the provisions of the Constitution.
    • Allocating the respective shares of these proceeds among the States.
    • Determining the principles governing grants-in-aid from the Consolidated Fund of India to the States, as well as the sums to be paid under Article 275 of the Constitution for specified purposes.
    • Identifying measures to enhance the Consolidated Fund of a State to support the finances of Panchayats and Municipalities based on State Finance Commission recommendations.
  • Additionally, the XVIFC is mandated to review current financing arrangements for Disaster Management initiatives, particularly funds under the Disaster Management Act, 2005 (53 of 2005), and provide relevant recommendations.
  • The commission invites suggestions and views from the public, organisations, and individuals on the specified terms of reference and its general approach. Feedback can be submitted through the commission’s website.
 More About Finance Commission:
  • Constitutional Body: The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution.
  • Composition: It typically consists of a chairman and four other members appointed by the President of India.
  • Five-Year Cycle: The Commission is constituted every five years to make recommendations on fiscal matters.
  • Tax Revenue Distribution: Its primary function is to recommend the distribution of tax proceeds between the central government and the state governments.
  • Assessment of Finances: The Commission assesses the financial position of both the central and state governments.
  • Principles for Distribution: Recommendations are made based on principles such as population, income levels, area, infrastructure, and fiscal discipline.
  • Grant-in-Aid: It advises on grants-in-aid to states and measures to augment their resources.
  • Other Referrals: The Commission also examines any other related issues referred to it by the President.
  • Recommendations Submission: After deliberations, its recommendations are submitted to the President for consideration.
  • Parliamentary Presentation: The President lays the Commission’s recommendations before both houses of Parliament.
  •  Non-binding Recommendations: While its recommendations are not binding, they significantly influence fiscal policies and federal relations.
  • Promotion of Cooperative Federalism: Through its work, the Finance Commission contributes to fostering cooperative federalism and equitable development across Indian states.
Terms of Reference (ToR) for the Sixteenth Finance Commission (XVIFC):
●  The Terms of Reference (ToR) for the Sixteenth Finance Commission (XVIFC) outline its scope and responsibilities.

●  It includes distributing net tax proceeds between the Union and States and allocating shares among States under Chapter I, Part XII of the Constitution.

The XVIFC determines principles for grants-in-aid from the Consolidated Fund of India to States and sums under Article 275 for specified purposes.

It also suggests measures to enhance State Consolidated Funds to support Panchayats and Municipalities based on State Finance Commission recommendations.

● Additionally, the commission reviews financing arrangements for Disaster Management initiatives, making recommendations under the Disaster Management Act, 2005.

● The XVIFC’s report is expected by October 31, 2025, covering a five-year period from April 1, 2026.

PYQ:

Q.1 How have the recommendations of the 14th Finance Commission of India enabled the States to improve their fiscal position? (150 words/10m) (UPSC CSE (M) GS-2 2021)

Q.2 How is the Finance Commission of India constituted? What do you know about the terms of reference of the recently constituted Finance Commission? Discuss.
(250 words/15m) (UPSC CSE (M) GS-2 2018)

Q.3 Discuss the recommendations of the 13th Finance Commission which have been a departure from the previous commissions for strengthening the local government finances. (200 words/10m) (UPSC CSE (M) GS-2 2013)

Practice Question:  Discuss the role and responsibilities of the Sixteenth Finance Commission (XVIFC) as outlined in its terms of reference. How does the XVIFC aim to address the distribution of tax proceeds between the Union and States, and what measures are proposed to support Disaster Management financing? (250 Words /15 marks)

2. International Thalassemia Day

Topic: GS2 – Indian Polity – Constitutional Bodies
Context
●  The Sixteenth Finance Commission (XVIFC), chaired by Dr. Arvind Panagariya, has been established to make recommendations for a five-year period starting April 1, 2026.

●  The commission invites suggestions and views from the public, organisations, and individuals on the specified terms of reference and its general approach.

 Analysis of the news:

  • The Sixteenth Finance Commission (XVIFC) has been established with Dr. Arvind Panagariya as Chairman, tasked with making recommendations for a five-year period starting April 1, 2026.
  • Its primary responsibilities include:
    • Distributing the net proceeds of taxes between the Union and the States as per the provisions of the Constitution.
    • Allocating the respective shares of these proceeds among the States.
    • Determining the principles governing grants-in-aid from the Consolidated Fund of India to the States, as well as the sums to be paid under Article 275 of the Constitution for specified purposes.
    • Identifying measures to enhance the Consolidated Fund of a State to support the finances of Panchayats and Municipalities based on State Finance Commission recommendations.
  • Additionally, the XVIFC is mandated to review current financing arrangements for Disaster Management initiatives, particularly funds under the Disaster Management Act, 2005 (53 of 2005), and provide relevant recommendations.
  • The commission invites suggestions and views from the public, organisations, and individuals on the specified terms of reference and its general approach. Feedback can be submitted through the commission’s website.
 More About Finance Commission:
Constitutional Body: The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution.

Composition: It typically consists of a chairman and four other members appointed by the President of India.

Five-Year Cycle: The Commission is constituted every five years to make recommendations on fiscal matters.

Tax Revenue Distribution: Its primary function is to recommend the distribution of tax proceeds between the central government and the state governments.

Assessment of Finances: The Commission assesses the financial position of both the central and state governments.

Principles for Distribution: Recommendations are made based on principles such as population, income levels, area, infrastructure, and fiscal discipline.

Grant-in-Aid: It advises on grants-in-aid to states and measures to augment their resources.

Other Referrals: The Commission also examines any other related issues referred to it by the President.

Recommendations Submission: After deliberations, its recommendations are submitted to the President for consideration.

Parliamentary Presentation: The President lays the Commission’s recommendations before both houses of Parliament.

Non-binding Recommendations: While its recommendations are not binding, they significantly influence fiscal policies and federal relations.

Promotion of Cooperative Federalism: Through its work, the Finance Commission contributes to fostering cooperative federalism and equitable development across Indian states.

Terms of Reference (ToR) for the Sixteenth Finance Commission (XVIFC):
The Terms of Reference (ToR) for the Sixteenth Finance Commission (XVIFC) outline its scope and responsibilities.

● It includes distributing net tax proceeds between the Union and States and allocating shares among States under Chapter I, Part XII of the Constitution.

The XVIFC determines principles for grants-in-aid from the Consolidated Fund of India to States and sums under Article 275 for specified purposes.

It also suggests measures to enhance State Consolidated Funds to support Panchayats and Municipalities based on State Finance Commission recommendations.

● Additionally, the commission reviews financing arrangements for Disaster Management initiatives, making recommendations under the Disaster Management Act, 2005.

● The XVIFC’s report is expected by October 31, 2025, covering a five-year period from April 1, 2026.

PYQ:

Q.1 How have the recommendations of the 14th Finance Commission of India enabled the States to improve their fiscal position? (150 words/10m) (UPSC CSE (M) GS-2 2021)

Q.2 How is the Finance Commission of India constituted? What do you know about the terms of reference of the recently constituted Finance Commission? Discuss.
(250 words/15m) (UPSC CSE (M) GS-2 2018)

Q.3 Discuss the recommendations of the 13th Finance Commission which have been a departure from the previous commissions for strengthening the local government finances. (200 words/10m) (UPSC CSE (M) GS-2 2013)

Practice Question:  Discuss the role and responsibilities of the Sixteenth Finance Commission (XVIFC) as outlined in its terms of reference. How does the XVIFC aim to address the distribution of tax proceeds between the Union and States, and what measures are proposed to support Disaster Management financing? (250 Words /15 marks)

 

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