Centre-State Financial Relations Under Scrutiny Amidst GST Compensation Cess Expiry
2024-07-15
The ongoing debates surrounding the financial autonomy of states, particularly after the expiry of the GST compensation cess, echo historical discussions on revenue distribution under the Government of India Act 1935. The Act, with its detailed but often restrictive financial provisions and the Centre's ultimate control, laid the groundwork for a financially strong Centre and dependent states. Contemporary demands by states for greater fiscal space and a larger share in central taxes reflect a continuous struggle to balance federal fiscal autonomy with central authority, a tension directly traceable to the foundational principles established by the 1935 Act.
UPSC Angle: Analyze the evolution of Centre-State financial relations from the 1935 Act to the present, focusing on the shift from a unitary to a quasi-federal fiscal structure and the challenges faced by states in achieving fiscal autonomy.