3 Indian & AP Economy and Planning · 3.4.5 Public finance

3.4.5.10 Fiscal federalism: Finance Commissions, the divisible pool and state borrowing

The Constitution gives the Centre the richer taxes and the States the larger spending duties, and the Finance Commission, appointed every five years, closes that gap by sharing taxes and giving grants.

  • APPSC Group 1
  • Advanced level
  • 7 min read
  • Full course

Key terms

  • Finance Commission
  • Article 280
  • divisible pool
  • vertical imbalance
  • horizontal imbalance
  • grants-in-aid
  • Article 275
  • Article 282
  • state borrowing
  • Article 293
  • FRBM states
  • State Finance Commission

What this note covers

  1. Core factsFoundation
  2. ExplainedStandard
  3. DeeperAdvanced
  4. AP angleStandard
  5. Mains writingMains writing
  6. Common trapsFoundation
  7. Quick revisionFoundation

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