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Grants-in-Aid #Grants-in-Aid

  It is a complimentary/secondary instrument to attend the issue of ‘horizontal imbalances’ of revenue accruing to the state.

  The primary tool is tax devolution.

  As per the Article 275, the FC recommends the principle – as well as the quantum of grants to those states which are in need of assistance – different sums may be fixed for different states (one of the pre-requisites for such grants is the assessment of the needs of the states).

  The 1st FC had laid down 5 broad principles for determining the eligibility of a state for grants:

  The Budget of a state as the starting point for examination of a need.

  The efforts made by states to realize the potential.

  The grants should help in equalizing the standards of basic services across states.

  Any special burden or obligations of national concern, though within the state’s sphere, should also be taken into account.

 Grants might be given to further any beneficent service of national interest to less advanced states.

 

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