DISCUSS THE SIGNIFICANCE OF ADITYA L1 MISSION AND IT PAYLOADS IMPORTANCE?

·       Aditya-I is India's first dedicated scientific mission to study the sun.

·       Aditya-L1 mission is aimed at studying the Sun from an orbit around the Sun-Earth Lagrangian point 1 (L1) which is about 1.5 million kilometres from the Earth.

·       It would carry seven payloads to observe the photosphere, chromosphere and the outermost layers of the Sun, the corona in different wavebands.

·       Aditya-L1 can provide observations on the corona and in addition can provide observations on the solar Chromosphere using the UV payload and on the flares using the X-ray payloads.The particle detectors and the magnetometer payload can provide information on charged particles and the magnetic field reaching the halo orbit around L1.

Therefore, the Aditya-1 mission has now been revised to “Aditya-L1 mission” and will be inserted in a halo orbit around the L1, which is 1.5 million km from the Earth.  

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The satellite carries additional six payloads with enhanced science scope and objectives.

·       Aditya-1 was meant to observe only the solar corona.

·       The outer layers of the Sun, extending to thousands of km above the disc (photosphere) is termed as the corona.

·       It has a temperature of more than a million degree Kelvin which is much higher than the solar disc temperature of around 6000K. How the corona gets heated to such high temperatures is still an unanswered question in solar physics.

·       Aditya-L1 with additional experiments can now provide observations of Sun's Corona (soft and hard X-ray, Emission lines in the visible and NIR), Chromosphere (UV) and photosphere (broadband filters). 

·       In addition, particle payloads will study the particle flux emanating from the Sun and reaching the L1 orbit, and the magnetometer payload will measure the variation in magnetic field strength at the halo orbit around L1. 

·       These payloads have to be placed outside the interference from the Earth’s magnetic field and could not have been useful in the low earth orbit.

·       The main payload continues to be the coronagraph with improved capabilities.  The main optics for this experiment remains the same.  

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The complete list of payloads, their science objective and lead institute for developing the payload is provided below:

Visible Emission Line Coronagraph (VELC): To study the diagnostic parameters of solar corona and dynamics and origin of Coronal Mass Ejections (3 visible and 1 Infra-Red channels); magnetic field measurement of solar corona down to tens of Gauss – Indian Institute of Astrophysics (IIA)

Solar Ultraviolet Imaging Telescope (SUIT): To image the spatially resolved Solar Photosphere and Chromosphere in near Ultraviolet (200-400 nm) and measure solar irradiance variations - Inter-University Centre for Astronomy & Astrophysics (IUCAA) 

Aditya Solar wind Particle Experiment (ASPEX) : To study the variation of solar wind properties as well as its distribution and spectral characteristics – Physical Research Laboratory (PRL)       

Plasma Analyser Package for Aditya (PAPA) : To understand the composition of solar wind and its energy distribution – Space Physics Laboratory (SPL), VSSC        

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Solar Low Energy X-ray Spectrometer (SoLEXS) : To monitor the X-ray flares for studying the heating mechanism of the solar corona – ISRO Satellite Centre (ISAC)

High Energy L1 Orbiting X-ray Spectrometer (HEL1OS): To observe the dynamic events in the solar corona and provide an estimate of the energy used to accelerate the particles during the eruptive events - ISRO Satellite Centre (ISAC)and Udaipur Solar Observatory (USO), PRL

Magnetometer: To measure the magnitude and nature of the Interplanetary Magnetic Field – Laboratory for Electro-optic Systems (LEOS) and ISAC.

          With the inclusion of multiple payloads, this project also provides an opportunity to solar scientists from multiple institutions within the country to participate in space based instrumentation and observations.  Thus the enhanced Aditya-L1 project will enable a comprehensive understanding of the dynamical processes of the sun and address some of the outstanding problems in solar physics.

DISCUSS THE POLICY MEASURES TAKEN BY GOVERNMENT TO PROMOTE GROWTH AND EMPLOYMENT GENERATION IN INDIAN ECONOMY?

            Measures to promote growth and employment generation: Tax policy plays an important role in promoting the growth and creation of employment. A number of measures have been taken by this Government in this direction, some of which are as under:

(i) Profit-linked deduction was introduced for start-ups.

(ii) The scope of investment-linked deduction was broadened by including certain new sectors, including infrastructure, which are critical to growth.

(iii) Investment allowance and higher additional depreciation was provided for undertakings set up in backward regions of states of Andhra Pradesh, Bihar, Telangana and West Bengal.

(iv) Incentive for employment generation was broadened and the conditions for eligibility to claim the incentive were relaxed.

 (v) Benefit was provided for computation of MAT liability and carry forward of loss for companies under Insolvency and Bankruptcy Code (IBC).

(vi) Safe Harbour provisions were further liberalised to align with industry standards.

(vii) Scope of domestic transfer pricing provisions was restricted only for transactions between enterprises having profit-linked deductions.

(vii) Pass through status was provided to Category I & II Alternative Investment Funds (AIFs).

 (viii) The time period for carry forward of MAT credit was increased from 10 to 15 years.  

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Enumerate measures taken by government  to enhance the sources of capital for infrastructure financing in India?

            Ease of compliance for small businesses: Small businesses constitute the backbone of our economy. In order to reduce the compliance burden of small businesses and professionals, following measures have been taken by this Government: (i) Threshold for presumptive taxation of businesses was raised from Rs. 1 crore to Rs. 2 crore. (ii) For maintenance of books of accounts by individuals and HUFs, (a) income threshold was raised from Rs. 1.20 lakh to Rs. 2.5 lakh; and (b) turnover threshold was raised from Rs. 10 Lakh to Rs. 25 Lakh. (iii) Presumptive taxation was introduced for professionals having receipts up to Rs. 50 lakh. 5. Measures to incentivise affordable housing and real estate:

            Measures to incentivise affordable housing and real estateHousing has been an area of concern for middle and lower-middle class. Further, real estate sector plays a significant role in generating employment in the economy. Considering the importance of housing sector, this Government has taken the following measures to promote this sector: (i) Deduction of interest on loan taken to purchase selfoccupied house property was increased from Rs. 1.5 lakh to Rs. 2 lakh. (ii) 100% deduction was provided for the income of affordable housing projects. (iii) The base year for computation of long term capital gains was shifted from 1981 to 2001. (iv) Holding period for long-term gain on immovable property was reduced from 36 months to 24 months. (v) Safe harbour of 5% on stamp duty value was provided for the purpose of computation of capital gains on immovable property. 

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            Incentives for start-ups: The condition for carry forward and set off of losses in cases of eligible start-ups is proposed to be relaxed enabling them to carry forward their losses on satisfaction of any one of the two conditions, i.e. continuity of 51% shareholding/voting power or continuity of 100% of original shareholders. Further, the provision which allows exemption of capital gains from sale of residential property on investment of net consideration in equity shares of eligible start-up shall be extended by 2 years. Thus the benefit shall be available for sale of residential property on or before 31st March, 2021. The condition of minimum holding of 50% of share capital or voting rights in the start-up is proposed to be relaxed to 25%. The condition restricting transfer of new asset being computer or computer software is also proposed to be relaxed from the current 5 years to 3 years.

ARTICLE 131

What is Article 131 of Indian constution ?Why it is news?

            While Article 131 says the Supreme Court has exclusive jurisdiction to decide disputes between the Centre and the state governments.

            Article 131, which deals with the original jurisdiction of the Supreme Court. A dispute to qualify as a dispute under Article 131, it has to necessarily be between states and the Centre, and must involve a question of law or fact on which the existence of a legal right of the state or the Centre depends. I

            Subject to the provisions of the Constitution, the Supreme Court shall, to the exclusion of any other court, have original jurisdiction.

What is original jurisdiction?

            Original jurisdiction of a court refers to its power to hear a case first.

            In criminal matters, offences under the Indian Penal Code are triable by the courts specified in the First Schedule of the Code of Criminal Procedure (CrPC).

            Courts of chief judicial magistrate, judicial magistrate of the first class, metropolitan magistrate and judicial magistrate of the second class have a limit on the amount of sentence they can pass, therefore, the case is committed to higher grade courts.

            A high court exercises its original criminal jurisdiction only if the subordinate courts are not authorised by law to try such matters for lack of jurisdiction.

            High courts, session judge or additional session judge can pass any sentence authorised by law, provided that the death sentence passed by court of session is confirmed by the high court.

            In civil matters, generally, suits are instituted in the court of the lowest grade competent to try it. Although the courts of higher grade can also entertain any case, the idea is not to overburden them.

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            The constitution of India, under Article 131, confers the Supreme Court original jurisdiction in certain special matters.

What are the matters where the original jurisdiction deals?

(a) between the Government of India and one or more States; or

(b) between the Government of India and any State or States on one side and one or more other States on the other; or

 (c) between two or more States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends:

Is there any bar on the original jurisdiction of the Supreme Court?

       Provided that the said jurisdiction shall not extend to a dispute arising out of any treaty, agreement, covenant, engagement, sanad or other similar instrument which, having been entered into or executed before the commencement of this Constitution, continues in operation after such commencement, or which provides that the said jurisdiction shall not extend to such a dispute.

Why it is news?

Kerala’s move to challenge the Citizenship (Amendment) Act (CAA) in the Supreme Court. 

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whether a state can challenge the validity of a central law?

            In a 1978 judgment, State of Karnataka v Union of India, Justice P N Bhagwati had said that for the Supreme Court to accept a suit under Article 131, the state need not show that its legal right is violated, but only that the dispute involves a legal question.

Example :A pending consideration before the Supreme Court in a case dating back to 2000. In this case, Jharkhand had challenged a provision in the Bihar Re-organisation Act, 2000, related to the apportionment of pension liability between the two states. The case was filed after Jharkhand was carved out of Bihar in 2000.

1.     Bihar has objected to the challenge by relying on a 2011 decision of a two-judge bench of the top court related to Madhya Pradesh’s challenge to the validity of certain provisions of Madhya Pradesh Reorganisation Act. The court, in that case, had ruled that a state cannot challenge a central law under Article 131. Bihar has cited the judgment and argued against Jharkhand’s challenge.

2.     The Supreme Court delivered its judgment in the Bihar versus Jharkhand case in November 2014, saying it cannot agree with the view taken of the two-judge bench. It ruled that Article 131 is worded in such a manner that the Supreme Court can decide disputes on questions of fact and law under Article 131.

3.     Supreme Court opined that a challenge to a central law can be made under Article 131. “Therefore, we find it difficult to accept the statement of law enunciated by this Court in State of Madhya Pradesh v. Union of India... We are unable to agree with the proposition that this Court cannot examine the constitutionality of a statute in the exercise of its exclusive original jurisdiction under Article 131”, the judgment said.

4.     The Supreme Court rejected West Bengal’s 2017 petition against the Aadhaar Act filed under Constitution’s Article 32, which empowers individuals and organisations to move court against government actions and laws, which may violate fundamental rights.

5.     the Chhattisgarh government filed a suit in the Supreme Court under Article 131, challenging the National Investigation Agency (NIA) Act on the ground that it encroaches upon the state’s powers to maintain law and order.

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How is a suit under Article 131 different from the other petitions challenging the CAA?

            The other petitions challenging the CAA have been filed under Article 32 of the Constitution, which gives the court the power to issue writs when fundamental rights are violated. A state government cannot move the court under this provision because only people and citizens can claim fundamental rights.

            Under Article 131, the challenge is made when the rights and power of a state or the Centre are in question.

            However, the relief that the state (under Article 131) and petitioners under Article 32 have sought in the challenge to the CAA is the same — declaration of the law as being unconstitutional.

Can the Centre too sue a state under Article 131?

            The Centre has other powers to ensure that its laws are implemented. The Centre can issue directions to a state to implement the laws made by Parliament. If states do not comply with the directions, the Centre can move the court seeking a permanent injunction against the states to force them to comply with the law. Non-compliance of court orders can result in contempt of court, and the court usually hauls up the chief secretaries of

Is it unusual for states to challenge laws made by Parliament?

            Under the Constitution, laws made by Parliament are presumed to be constitutional until a court holds otherwise. However, in India’s quasi-federal constitutional structure, inter-governmental disputes are not uncommon.

            The framers of the Constitution expected such differences, and added the exclusive original jurisdiction of the Supreme Court for their resolution. The quasi-federal structure envisaged in 1950 has consolidated into defined powers of the states.

can the Supreme Court declare legislation unconstitutional under Article 131?

            In the case of State of Madhya Pradesh v. Union of India and Anr. (supra), that in an original suit under Article 131, the constitutionality of an enactment cannot be examined.

            Since the above decision is rendered by a coordinate Bench of two judges, judicial discipline demands that we should not only refer the matter for examination of the said question by a larger Bench of this Court, but are also obliged to record broadly the reasons which compel us to disagree. 

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What constitution  say that?

            In India’s federal structure, states have a constitutional obligation to implement the Citizenship Amendment Act, 2019 as passed by Parliament. As per Article 246 of the Constitution, the 17th entry under the Union List of the Seventh Schedule provides exclusive powers to Parliament to legislate on matters related to “citizenship, naturalisation and aliens”. It is tragic to note, therefore, that the chief ministers belonging to Opposition parties, despite taking the oath for bearing true faith and allegiance to the Constitution, are making a mockery of it by publicly expressing their ill-will and expressing their reluctance to to implement the CAA — this is nothing but petty votebank politics. Articles 245 and 256 of the Constitution also oblige states to ensure compliance with the laws made by Parliament. The declaration by the governments of Kerala, West Bengal, Madhya Pradesh, Chhattisgarh, Rajasthan and Maharashtra that these states will not implement the CAA is, therefore, unconstitutional. Even then, while framing the CAA’s rules, the government is considering experts’ suggestions to make the Act operational.

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FEATURES OF CODE WAGE BILL 2019

·       The Code on Wages, 2019 was introduced in Lok Sabha by the Minister of Labour, Mr. Santosh Gangwar on July 23, 2019. It seeks to regulate wage and bonus payments in all employments where any industry, trade, business, or manufacture is carried out.  The Code replaces the following four laws: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976.

·       Coverage: The Code will apply to all employees.  The central government will make wage-related decisions for employments such as railways, mines, and oil fields, among others.  State governments will make decisions for all other employments.

·       Wages include salary, allowance, or any other component expressed in monetary terms. This does not include bonus payable to employees or any travelling allowance, among others.

·       Floor wage: According to the Code, the central government will fix a floor wage, taking into account living standards of workers.  Further, it may set different floor wages for different geographical areas.  Before fixing the floor wage, the central government may obtain the advice of the Central Advisory Board and may consult with state governments.  

·       The minimum wages decided by the central or state governments must be higher than the floor wage. In case the existing minimum wages fixed by the central or state governments are higher than the floor wage, they cannot reduce the minimum wages.

·       Fixing the minimum wage: The Code prohibits employers from paying wages less than the minimum wages.  Minimum wages will be notified by the central or state governments.  This will be based on time, or number of pieces produced.  The minimum wages will be revised and reviewed by the central or state governments at an interval of not more than five years.  While fixing minimum wages, the central or state governments may take into account factors such as: (i) skill of workers, and (ii) difficulty of work.

·       Overtime: The central or state government may fix the number of hours that constitute a normal working day.  In case employees work in excess of a normal working day, they will be entitled to overtime wage, which must be at least twice the normal rate of wages.  

·       Payment of wages: Wages will be paid in (i) coins, (ii) currency notes, (iii) by cheque, (iv) by crediting to the bank account, or (v) through electronic mode.  The wage period will be fixed by the employer as either: (i) daily, (ii) weekly, (iii) fortnightly, or (iv) monthly.

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·       Deductions: Under the Code, an employee’s wages may be deducted on certain grounds including: (i) fines, (ii) absence from duty, (iii) accommodation given by the employer, or (iv) recovery of advances given to the employee, among others.  These deductions should not exceed 50% of the employee’s total wage.

·       Determination of bonus: All employees whose wages do not exceed a specific monthly amount, notified by the central or state government, will be entitled to an annual bonus.  The bonus will be at least: (i) 8.33% of his wages, or (ii) Rs 100, whichever is higher.  In addition, the employer will distribute a part of the gross profits amongst the employees.  This will be distributed in proportion to the annual wages of an employee.  An employee can receive a maximum bonus of 20% of his annual wages.

·       Gender discrimination: The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature.  Work of similar nature is defined as work for which the skill, effort, experience, and responsibility required are the same. 

·       Advisory boards: The central and state governments will constitute advisory boards.  The Central Advisory Board will consist of: (i) employers, (ii) employees (in equal number as employers), (iii) independent persons, and (iv) five representatives of state governments.  State Advisory Boards will consist of employers, employees, and independent persons.  Further, one-third of the total members on both the central and state Boards will be women.  The Boards will advise the respective governments on various issues including: (i) fixation of minimum wages, and (ii) increasing employment opportunities for women.

·       Offences: The Code specifies penalties for offences committed by an employer, such as (i) paying less than the due wages, or (ii) for contravening any provision of the Code.  Penalties vary depending on the nature of offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees. 

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WHAT IS THE PURPOSE OF THE ANTI-DEFECTION LAW? WHAT ARE THE GROUNDS OF DISQUALIFICATION?

            Articles 102 (2) and 191 (2) deals with anti-defection.The intention of the provision is to check the corruption/horse trading in parliament/ to check the popular phenomenon.

            The purpose, as is obvious, is to curb political defection by the legislators. There are two grounds on which a member of a legislature can be disqualified.

·       One, if the member voluntarily gives up the membership of the party, he shall be disqualified. Voluntarily giving up the membership is not the same as resigning from a party. Even without resigning, a legislator can be disqualified if by his conduct the Speaker/Chairman of the concerned House draws a reasonable inference that the member has voluntarily given up the membership of his party.

·       Second, if a legislator votes in the House against the direction of his party and his action is not condoned by his party, he can be disqualified. These are the two grounds on which a legislator can be disqualified from being a member of the House.

            However, there is an exception that was provided in the law to protect the legislators from disqualification.

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             The 10th Schedule says that if there is a merger between two political parties and two-thirds of the members of a legislature party agree to the merger, they will not be disqualified.

            Speaker/ chairman of the house is the authority to decide on defection cases. Speaker sits as a tribunal while deciding on defection cases. All proceedings in relation to any question on disqualification of a member of a House under this Schedule are deemed to be proceedings in Parliament or in the Legislature of a state. No court has any jurisdiction. However, the decision can be brought to court after Kihoto Hollohan case of 1992.

Issue :The Supreme Court on urged Parliament to take a call on setting up an independent tribunal to “swiftly and impartially” decide on the disqualification of lawmakers under the anti-defection law.

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NATIONAL STRATEGY FOR FINANCIAL INCLUSION FOR INDIA 2019-2024

Definition of financial inclusion?

            Financial inclusion has been defined as “the process of ensuring access to financial services,

timely and adequate credit for vulnerable groups such as weaker sections and low-income groups

at an affordable cost.

Why financial inclusion?

            Financial inclusion is increasingly being recognized as a key driver of economic growth

and poverty alleviation the world over.

            Access to formal finance can boost job creation, reduce vulnerability to economic shocks and increase investments in human capital. Without adequate access to formal financial services, individuals and firms need to rely on their own limited resources or rely on costly informal sources of finance to meet their financial needs and pursue growth opportunities.

            At a macro level, greater financial inclusion can support sustainable and inclusive socio-economic growth for all.

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            There has been a growing evidence on how financial inclusion has a multiplier effect in  boosting overall economic output, reducing poverty and income inequality at the national level. Financial inclusion of women is particularly important for gender equality and women’s economic empowerment.

            With greater control over their financial lives, women can help themselves and their families to come out of poverty; reduce their risk of falling into poverty; eliminate their exploitation from the informal sector; and increase their ability to fully engage in measurable and productive economic activities.

            An inclusive financial system supports stability, integrity and equitable growth. Therefore,financial exclusion because of several barriers likephysical, socio-cultural and psychological, warrants attention from the policy makers. Some of the key reasons resulting in involuntary exclusion are:

Why financial inclusion strategy?

1)seeks to address the inherent barriers of access to a gamut of financial products and services. 

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2)financial inclusion as a key enabler for achieving sustainable development worldwide by improving the quality of lives of poor and marginalized sections of the society.

3)An inclusive financial system (ably supported through sound financial inclusion policies, focus on financial education and customer protection) is not only pro-growth but also pro-poor with the potential to reduce income inequality and poverty, promote social cohesion and shared economic development.

Status of financial inclusion in India :

            India began its financial inclusion journey as early as in 1956 with the nationalisation of Life Insurance companies. This was followed by nationalisation of banks in 1969 and 1980. The general insurance companies were nationalised in 1972. A review of the status of financial inclusion in India indicates that a host of initiatives have been undertaken over the years in the financial inclusion domain.

            Under PMJDY, 34.01 crore2 accounts have been opened with deposits amounting to ₹89257 crore upto January 30, 2019 within a short span of five years.

            Under Pradhan Mantri Suraksha Bima Yojana (PMSBY) a renewable one- year accidental death cum disability cover of ₹2 lakhs is offered to all subscribing bank account holders in the age group of 18 to 70 years for a premium as low as ₹12/- per annum per subscriber.

            Under APY, a subscriber (in the age group of 18 to 40 years) will receive fixed monthly pension in the range of ₹1,000 to ₹5,000 after completing 60 years of age, depending on the contributions made by the subscriber.

Also various measures that have been undertaken by various stakeholders in strengthening financial inclusion in the country, there are still critical gaps existing in the usage of financial services that require attention of policy makers through necessary co-ordinationand effectivemonitoring. 

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1.     Inadequate Infrastructure: Limited physical infrastructure, limited transport facility, inadequately trained staff etc., in parts of rural hinterland and far flung areas of the Himalayan and North East regions create a barrier to the customer while accessing financial services.

2.     Poor Connectivity: With technology becoming an important enabler to access financial services, certain regions in the country that have poor connectivity tend to be left behind in ensuring access to financial services thereby creating a digital divide. Technology could be the best bridge between the financial service provider and the last mile customer. Fintech companies can be one of the best solutions to address this issue. The key challenge that needs to be resolved would be improving tele and internet connectivity in the rural hinterland and achieving connectivity across the country.

3.     Convenience and Relevance: The protracted and complicated procedures act as a deterrent while on-boarding customers. This difficulty is further increased when the products are not easy to understand, complex and do not meet the requirements of the customers such as those receiving erratic and uncertain cash flows from their occupation.

4.     Socio-Cultural Barriers: Prevalence of certain value system and beliefs in some sections of the population results in lack of favourable attitude towards formal financial services. There are still certain pockets wherein women do not have the freedom and choice to access financial services because of cultural barriers.

5.     Product Usage: While the mission-based approach to financial inclusion has resulted in increasing access to basic financial services including micro insurance and pension, there is a need to increase the usage of these accounts to help customers achieve benefits of relevant financial services and help the service providers to achieve the necessary scale and sustainability. This can be undertaken through increasing economic activities like skill development and livelihood creation, digitising Government transfers by strengthening the digital transactions’ eco-system, enhancing acceptance infrastructure, enhancing financial literacy and having in place a robust customer protection framework.

6.     Payment Infrastructure: Currently, majority of the retail payment products viz., CTS, AEPS, NACH, UPI, IMPS etc. are operated by National Payments Council of India (NPCI), a Section (8) Company promoted by a group of public, private and foreign banks. There is a need to have more market players to promote innovation & competition and to minimize concentration risk in the retail payment system from a financial stability perspective.

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National Strategy for Financial Inclusion for India 2019-2024

            The vision for financial inclusion as, “convenient access to a basket of basic formal financial products and services that should include savings, remittance, credit, government-supported insurance and pension products to small and marginal farmers and low-income households at reasonable cost with adequate protection progressively supplemented by social Cash transfers, besides increasing the access of small and marginal enterprises to formal finance with a greater reliance on technology to cut costs and improve service delivery.

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Pillars of National Strategy for Financial Inclusion for India 2019-2024:

 

Measuring Finacial inclusion :

ENVIRONMENT AND ECOLOGY BY MAJID HUSSAIN

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KIRANS GS P1 SHORT NOTES

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POLITY READY RECKONER - LA EXCELLENCE

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REASONING AND ABILITY BY SICE

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AP STATE FINANCE COMMISSION

            Article 243I of the Indian Constitution prescribes that the Governor of a State shall, as soon as may be within one year from the commencement of the Constitution (Seventy-third Amendment) Act, 1992, and thereafter at the expiration of every fifth year, constitute a Finance Commission to review the financial position of the Panchayats and to make recommendations to the Governor as to

1. The principles which should govern
1. The distribution between the State and the Panchayats of the net proceeds of the taxes, duties, tolls and fees leviable by the State, which may be divided between them under this Part and the allocation between the Panchayats at all levels of their respective shares of such proceeds;
2. The determination of the taxes, duties, tolls and fees which may be assigned as, or appropriated by, the Panchayats;
3. The grants-in-aid to the Panchayats from the Consolidated Fund of the State;
2. The measures needed to improve the financial position of the Panchayats;
3. Any other matter referred to the Finance Commission by the Governor in the interests of sound finance of the Panchayats.

            Article 243Y of the Constitution further provides that the Finance Commission constituted under Article 243 I shall make similar recommendation vis-a-vis municipalities.

            The Governor is required to cause every recommendation made by the State Finance Commission together with an explanatory memorandum as to the action taken thereon to be laid before the Legislature of the State.

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A comparison between central and State finance commissions:

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RBI Recommendations (2009) for strengthening SFCs

1.     Provide a uniform template to the SFCs so that there are not constituted in a casual manner

2.     Incentivise the State Governments to set up a data warehouse for the local bodies.

3.     Set up a central pool of fiscal experts from which the State Governments may select at least one member of SFC.

4.     Provide a time line to the State Governments in link to the release of share in central taxes for making progress in the arena of SFC.

Way Forward:

1.     In line with constitutional requirements, the states should constitute SFCs in a periodic manner

2.     It is important to acknowledge the role of SFCs. It is important to rectify the notion the SFCs are less important the UFC and that local governments are insignificant. The Constitution treats a local government on a par with a State government, especially when it comes to sharing of financial resources.

3.     The information of responsibilities and funds allocated to local bodies should be recorded properly so as to provide reliable data to the SFCs

4.     The composition of SFCs should incorporate representatives from the intellectual civil society/academicians and not solely comprise of bureaucrats

5.     To make India a sustainable and inclusive country, it is important that the UFC reduce inter-state disparity and then only SFCs can reduce intra-state disparity by using horizontal distribution criteria

6.     It is an urgent need to strengthen the SFCs to promote cooperative federalism and strengthen participatory democracy.

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