GS2 2025 Q14 15 marks 250 words Fiscal Federalism

UPSC Mains 2025 GS2 Q14 — Fiscal Federalism

Examine the evolving pattern of Centre-State financial relations in the context of planned development in India. How far have the recent reforms impacted the fiscal federalism in India? (Answer in 250 words)

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Question Decoded — examiner's intent

Directive verbs
ExamineHow far
Scope keywords
evolving patternCentre-State financial relationsplanned developmentrecent reformsfiscal federalism
Implicit sub-parts
  • Tracing the shift from the Planning Commission era (centralized) to the NITI Aayog era (cooperative).
  • Analyzing the impact of the 14th and 15th Finance Commissions on vertical and horizontal devolution.
  • Evaluating the structural change brought by the GST regime and its impact on states' fiscal autonomy.
  • Assessing the role of Centrally Sponsored Schemes (CSS) and 'Cess and Surcharge' in modern fiscal friction.
Common pitfalls
  • Focusing only on the GST and ignoring the historical transition from the 'Gadgil-Mukherjee' formula.
  • Failing to mention the abolition of the Planning Commission as a turning point in 'planned development'.
  • Omitting the recent trend of increasing 'Cess and Surcharge' which stays outside the divisible pool.
  • Describing the 14th FC hike to 42% without mentioning the simultaneous cut in central grants, which neutralized the gains for many states.
Dimensions required
Historical/EvolutionaryConstitutional (Art 280, 279A, 293)Structural (GST, NITI Aayog)Fiscal/EconomicPolitical/Federal
Marks allocation hint

Spend approximately 100 words on the evolution from the Planning Commission era to the present, highlighting the shift in 'planned development' logic. Devote the remaining 150 words to evaluating 'recent reforms' like GST, 15th FC recommendations, and the issue of fiscal space (Cess/Surcharge), ensuring a balanced critique of their impact on state autonomy.

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