Do you agree with the view that functions are given to the States while resources are with the Centre ?

Question

Ghissu Editorial · Accepted Answer

The view is largely accurate: the Seventh Schedule gives States heavy duties in health, education and police, while the Centre controls buoyant taxes like income tax and customs, creating a vertical fiscal imbalance. Finance Commission devolution under Article 280 partly corrects it, but conditional grants keep States dependent.

**Introduction**

India’s Constitution assigns functions to States but centralizes resources, creating fiscal imbalance and affecting federal relations, highlighted by demands from ==Andhra Pradesh⟦1⟧== for fiscal autonomy. This mismatch challenges the effective delivery of services and strains Centre-State cooperation.

**Constitutional and Legal Basis**

1. **Functional Distribution**: Article 246 and the Seventh Schedule allocate social sector functions like health and education primarily to States, ensuring functional autonomy. States also manage police and local governance, reflecting their key role in welfare.

**Implications on Federal Balance⟦2⟧**

3. **State Dependence and Audit Evidence**: ==Andhra Pradesh CAG 2025== audit shows gaps in welfare, education, and health linked to resource shortfalls and delayed fund transfers. This dependence weakens States’ ability to plan and implement policies effectively.

4. **Political Tensions**: Central control fuels demands like Special Category Status and river water disputes in ==Andhra Pradesh==, straining cooperative federalism⟦3⟧. The use of Article 356 and control over All India Services further dilute State autonomy.

**Challenges and Consequences**

5. **Fiscal Deficits and Debt**: States face deficits and debt burdens due to limited revenue sources, as seen in ==Andhra Pradesh==’s financial stress. Reliance on market borrowings increases debt servicing costs, reducing funds for development.

**Way Forward**

7. **Finance Commission⟦4⟧ Reform**: Strengthen the Finance Commission as a permanent, independent body with State input to ensure fair resource sharing. The Sarkaria Commission recommended this to balance authority and resources effectively.

8. **Enhance State Fiscal Autonomy**: Expand States’ taxation powers and reduce conditionalities on grants to empower them financially, enabling better governance and development outcomes.

**Conclusion**

Addressing the mismatch between functions and resources is vital to uphold federal balance and State autonomy. Equitable fiscal federalism will strengthen cooperative governance and improve service delivery across States.

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