In 1928, Indian National Congress initiated an All Parties Conference which appointed a Committee under the Chairmanship of Motilal Nehru to determine the principles of Constitution of India. The Committee in its Report accepted the principles of federalism which was recommended by all the political parties. Its principles of fiscal federalism was premised on the 'division of revenue of the country between the central and provincial governments' with special focus on the assignment of money for the care of 'defence, education, and other essential matters'. Also, there was to be a 'Railway and Habour Fund' raised by the parliament for the administration of 'railways, post and habour'.
The Report proposed a formation of 'Consolidated revenue fund into which (was) to be paid all other revenues raised or received' by the government of India appropriated by parliament. The Report created 'central subjects which included 'taxation excluding the taxation assigned under the constitution to the provinces or parts of them but including customs, revenue, excise, income tax super tax, corporation profit tax, opium'. Then, there was provincial subjects which included local taxation, land revenue, etc.
For financial control there was to be appointed an Auditor General in India. Two decades later, when the Constituent Assembly finalized its operative framework of federalism, which is functional till date, its content (70% of it) was premised on the principles of Motilal Nehru Committee Report.
In the past 72 years, the political and market dynamics, particularly under the aegis of globalization, has generated two kinds of contradictory trends: while there has developed more political and financial autonomy to the states, there are developing standardized attributes of the market in fiscal functioning of the governments of the centre and states regulated through economic management.
To understand this development of fiscal federalism in India, the NMML is organizing a two day conference at Indian Institute of Advance Studies in Shimla in which academia, public intellectuals participate to debate its different fiscal aspects of constitutional and administrative provisions in the context of historical trajectory.
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