(a) As a constitutionally mandated body the Finance Commission stands at the centre of fiscal federalism. Evaluate the role of…

(a) The Finance Commission and fiscal federalism

Article 280 provides for a Finance Commission (FC), constituted every five years, to correct vertical fiscal imbalance between the Union and the States and horizontal disparities among States. On vertical sharing, the 14th FC raised the States' share of the divisible pool to 42%, the 15th set it at 41% after Jammu and Kashmir became a Union Territory, and the 16th FC (constituted December 2023 under Arvind Panagariya, covering 2026-31) retained 41%. Horizontally, the 15th FC gave 45% weight to income distance, 15% each to population (2011 Census) and area, 10% to forest and ecology, 12.5% to demographic performance and 2.5% to tax effort, balancing equity with incentives.

Constraints remain. First, using 2011 population drew criticism from southern States that had controlled fertility, despite the demographic-performance weight. Second, cesses and surcharges outside the divisible pool have pushed actual devolution well below the headline figure; proposals to cap them or bring them into the pool seek to restore equity. Third, the end of the Planning Commission and of Special Category Status left post-devolution revenue-deficit grants carrying more of the equalising burden. Fourth, GST has reduced States' own tax autonomy, and the end of GST compensation in June 2022 exposed them to revenue volatility.

The FC has kept its credibility through formula-based, transparent transfers, but its capacity to ensure equity is limited by Union-level fiscal centralisation.

(b) Market approaches versus public service values

New Public Management and Public Choice ideas have challenged Weberian and constitutional public service values such as equity, universal access, neutrality and procedural accountability, by stressing efficiency, cost recovery and competition.

In infrastructure and utilities, PPPs in metro rail and discom privatisation (Delhi, 2002; Odisha, with Tata Power taking over from 2020) have prioritised commercial viability, raising disputes over tariffs and cherry-picking of lucrative zones, often at the cost of vulnerable users.

In social provisioning, publicly funded insurance (Ayushman Bharat-PMJAY, 2018) and state reimbursement for the 25% private-school seats under Section 12(1)(c) of the RTE Act turn the state from provider into purchaser. This widens choice but can divert public money to private providers while primary public facilities stay under-resourced.

Citizen's Charters risk dilution when turned into commercial service-level agreements that treat citizens as 'customers' and weaken redress for non-remunerative public goods. In power and telecom, outsourcing raises the risk of regulatory capture, as independent regulators balance investor returns against public interest.

Market methods have brought execution efficiency, for example in e-governance such as DigiLocker and UMANG, but they cannot substitute for the state's constitutional duty of social justice.

(c) Criminalisation of politics and the democratic fabric

Criminalisation corrodes democratic legitimacy, the rule of law and administrative neutrality. ADR data show MPs in the Lok Sabha with declared criminal cases rising from 24% in 2004 to 43% in 2019 and about 46% in 2024, many facing serious charges. Money power and the 'winnability' of candidates sustain it, eroding trust in legislatures.

The Vohra Committee (1993) had flagged the criminal-politician nexus. The Supreme Court has intervened repeatedly: Lily Thomas v. Union of India (2013) ended the protection of sitting legislators under Section 8(4) of the RP Act, so conviction brings immediate disqualification; Public Interest Foundation (2018) mandated wide publicity of candidates' criminal antecedents; Rambabu Singh Thakur (2020) required parties to publish why they chose such candidates; and in the Ashwini Upadhyay litigation it directed special courts to speed up trials of MPs and MLAs. It has held that disqualification before conviction is for Parliament to legislate, while the Law Commission's 244th Report (2014) urged disqualification on framing of charges for serious offences.

Remedies include amending Section 8 of the Representation of the People Act, 1951 on disqualification at framing of serious charges, inner-party democracy, state funding of elections and a stronger Election Commission under Article 324.