The commission’s other members have not yet been announced. When it selected Panagariya for the role, the government may have made a statement or given a signal on the commission. He is aware of the political and financial climate that the panel must function in in order to carry out its recommendations.
The commission’s exact parameters of scope have not been specified by the government. This is in contrast to the previous approach, in which the commission was given specific directives by the governments regarding the topics and areas that needed to be addressed. This may indicate that the government has sufficient faith in the commission’s capacity to carry out its duties and grant it a great deal of autonomy and breadth.
Source: X.com
The commission must make decisions about the allocation of taxes between the federal government and the states as well as the guidelines for doing so. The SFC is required to provide its recommendations for the years 2026 through 2031. In an uncertain period of fiscal federalism, this is a difficult undertaking. A fair distribution of fiscal resources and devolution must be guaranteed to the states. States with lower incomes receive a bigger portion of the divided resource pool.
States in the South, most notably Karnataka, have complained that they are being punished for their progress and improved population and fiscal control while states in North India are benefiting at their price. With the implementation of the Goods and Services Tax (GST), which has eliminated a significant revenue stream for the states, and the growing imposition of rules and regulations by the Centre over their financial management, the states have felt more and more bound.
Source: Drishti IAS: English
They are not happy that they are losing their autonomy to determine how much money to spend and that their capacity to raise funds is decreasing. In the upcoming years, the commission will have to formulate policies on subsidies and the fiscal imbalance, which will become increasingly significant. The commission will also need to address the issues of inaccurate and insufficient data. The population has a significant role in allocating the resources from the divisible pool.
The panel will have to depend on the data from the 2011 census and create its own forecasts and assumptions in order to base its recommendations because the 2021 census has not been done. Not only would a plethora of other data be unavailable, but so would data on per capita income. Concerns have also been raised regarding the accuracy of certain statistics. Effective resolution of these concerns is crucial if the commission is to provide worthwhile results.
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