Supreme Court expressed concern about states approaching court over fund disbursal by Centre | Current Affairs | Vision IAS
News Today Logo

    Supreme Court expressed concern about states approaching court over fund disbursal by Centre

    Posted 16 Apr 2024

    2 min read

    • Recently, Karnataka approached SC to seek relief against Centre in matters related to release of financial assistance from National Disaster Response Fund (NDRF) for drought management.  
      • Earlier, Tamilnadu also approached SC for non-disbursal of funds by centre under NDRF to deal with calamities of cyclone Michaung and unprecedented floods.

     

    • Status of State Finance
      • States finance only 58 % of their revenue expenditure from their revenue sources.
      • Debt-GDP ratio of states stands at 27.5 % (March 2023). 

     

    • Reasons for State's dependency on Centre
      • GST compensation for states ended in June 2022, and revenue collected under SGST is lower than revenue from taxes subsumed under GST.
      • Increased use of cesses and surcharge by Centre which are not shared with states.
      • Strained on states finances due to measures like farm loan waivers etc.

     

    • Measures taken to improve State Finance
      • Scheme for Special Assistance to States for Capital Expenditure provides 50-year interest-free loans to States.
      • 15th Finance Commission recommended performance-based additional borrowing space of 0.50% of State GDP to States in power sector. 

     

    • Way Forward 
      • Foster business-friendly tax administration, to strengthen states revenue collection. 
      • Revise user charges on electricity, water, and other public services, etc. to increase non-tax revenue.

     

    Constitutional Provisions related to States’ finances

    • Article 275: Parliament may by law provide to certain states, grants-in-aid charged on Consolidated Fund of India.
    • Article 282: Enables Union (and states) to make discretionary grants, for any ‘public purpose'.
    • Article 293:  Confers power on States to borrow money within limits prescribed by State legislature.

     

     

    • Tags :
    • State Finance
    • Constitutional Provisions for State Finance
    Watch News Today
    Subscribe for Premium Features