Discuss the policy initiatives of the Fourteenth Finance Commission aimed towards promoting and strengthening agricultural development in India.(UPSC CSE Mains 2022 - Political Science and International Relations, Paper 1)
14th Finance Commission (a Constitutional body formulated under Article 280 of the Indian Constitution and is constituted every five years by the President of India) indirectly tried to be coherent towards accumulating agricultural activities via gram panchayats, power subsidy, and other similar key metrics.
- Calculations for distribution of divisible proceeds are based on the formula incorporating parameters of population (1971), changes in population since then, income distance, forest cover and area. With income distance, it ensured that there can be equitable division of funds among states, by focussing on those states that are highly dependent on agriculture than those that are mechanized and heavily built on services.
- With the 2011 Census as population, the tax devolution affected states like Kerala and Tamil Nadu due to their family planning programmes and helped agronomic states like UP and Bihar, thus bolstering agricultural development.
- A basic grant and a performance grant — the ratio of basic to performance grant be 90:10, with respect to panchayats, thus, allowing a space to keep up the pace of agro-economy.
- On the grounds of forest cover and area, there is a space made up for agro[1]forestry activities that could have helped local self government (Urban forestry as part of the 18 subjects present under the 12th Schedule). In addition to this, it promotes tribal culture who focus upon indigenous production of agro-goods.
- The States will have to show results on the ground while implementing their own exclusively designed development programmes in health, education, agriculture, sanitation, housing and drinking water. In future they cannot really complain that the Center is not giving enough funds for these programmes.
- The 14th FC allocated 4.31% of its divisible pool (Rs.2,87,436 crore) to the Local Government while allocating 30% (Rs.87,000 crores) to its municipalities.
- As per the report presented by 14th Finance Commission, between the time span of 2005-06 and 2011-12, revenue expenditure by the Union Government on State List subjects (which includes agriculture) increased from an average of 14% to 20%.
- Due to this reason, the Commission recommended that the Union government should move its focus from spending on overlapping functional domain to subjects that squarely fall in the functional domain of the Union, as in the Union List, and limit its intervention on the ‘State List’ and ‘Concurrent List’ on subjects of national priority having a consideration of externality.
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