GS Paper II · Federalism
Fiscal Federalism Current Affairs for UPSC (GS Paper II)
From the syllabus: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels
Why it matters: Questions focus on resource mobilization challenges, tax devolution formulas, and the financial autonomy struggles experienced by state governments.
In the news
October 2026
11 Oct 2026
GST Council Unveils Major Administrative OverhaulThe Goods and Services Tax Council has unveiled a series of administrative and process reforms aimed at streamlining input tax credit refunds, easing business registrations, and reducing litigation. Union Finance Minister Nirmala...
10 Oct 2026
GST Council Rolls Out Process Reforms to Streamline Tax ComplianceThe Goods and Services Tax (GST) Council has announced a wide-ranging package of procedural reforms aimed at easing input tax credit refunds, simplifying business registrations, and reducing litigation. Union Finance Minister Nirmala...
08 Oct 2026
Structural Reforms Vital for Municipal Property TaxationIndia's cumulative property tax collections remain low at just 0.15 to 0.20 percent of GDP, pointing to an urgent need for structural reforms in municipal bodies. Municipalities struggle with outdated valuation systems, low tax...
06 Oct 2026
Centre Proposes Five-Pronged Reform Plan at GST CouncilThe Central Government is set to present a comprehensive five-pronged reform plan during the upcoming Goods and Services Tax (GST) Council meeting. The proposed plan focuses on process reforms, structural rationalisation of tax rates,...
September 2026
25 Sep 2026
Mineral Rights Legislation Raises Revenue Concerns for StatesLegislators in mineral-rich states like Odisha have raised concerns over recent parliamentary amendments to mining laws that curb the power of state governments to impose additional taxes and cesses on mineral rights. State authorities...
18 Sep 2026
Kearney Study Suggests Reforms for Tamil Nadu's Fiscal CapacityA study conducted by management consulting firm Kearney has analyzed the fiscal health of Tamil Nadu. The report states that the core challenge for the state is not excessive borrowing but lower efficiency in tax collection and spending...
17 Sep 2026
Mining Law Amendments Spark Concerns Over State RevenuesRecent amendments to central mining laws have raised key questions regarding fiscal federalism and state revenue shares. States bearing the infrastructural, environmental, and social burdens of mineral extraction contend that they must...
01 Sep 2026
Gross GST Revenue Collection Hits MilestoneIndia registered a gross Goods and Services Tax (GST) collection of 2 lakh crore rupees in August 2026, representing a 15 percent year-on-year increase. The total mop-up comprised Central GST at 38,413 crore rupees, State GST at 46,316...
01 Sep 2026
Debates Rise Over Equity and Efficiency in 16th Finance Commission MandateEconomists and policy experts have highlighted concerns regarding the balancing act between economic efficiency and inter-state equity for the 16th Finance Commission. As revenue distribution formulas are finalized, critics emphasize...
August 2026
31 Aug 2026
Sixteenth Finance Commission and the Equity Debate in Fiscal FederalismExperts have highlighted growing concerns regarding the mandate of the Sixteenth Finance Commission, warning against a drift away from its core role as an equalizing force among states. The balance between rewarding fiscal efficiency of...
19 Aug 2026
Fiscal Stress and Escalating Borrowings in State FinancesMid-year fiscal data indicates that several Indian states are experiencing revenue collections well below annual budget projections. As a consequence, states have utilized over half of their annual borrowing limits within the first four...
19 Aug 2026
Balancing Unconditional Cash Transfers with Social Capital InvestmentEconomic policy debates have emerged over the rapid expansion of direct, unconditional cash transfer schemes by several state governments. Data shows that growing revenue expenditure on immediate cash assistance risks crowding out...
18 Aug 2026
Mining Amendment Act Raises Fiscal Federalism ConcernsThe proposed Mining Amendment Act has drawn opposition from several states over concerns that it undermines the federal revenue structure. Resource-rich states argue that altering royalty structures and taxation frameworks diminishes...
18 Aug 2026
Debate Surrounds Unconditional Cash Transfers vs Public SpendingRecent economic analyses indicate that an excessive focus on unconditional cash transfer schemes risks diverting resources from long-term public investments in health and education. While direct benefit transfers provide immediate...
18 Aug 2026
States Shift to Solar Subsidies to Reduce Discom BurdenSeveral state governments are redirecting funds from traditional electricity subsidies toward capital subsidies for rooftop solar installations. This strategic shift aims to lower overall financial losses incurred by state power...
17 Aug 2026
Special Assistance to States for Capital Investment Supports InfrastructureState governments are utilizing 50-year interest-free loans granted under the Central Government's Special Assistance to States for Capital Investment scheme. The scheme provides financial support to states for major infrastructure...
17 Aug 2026
States Redirect Power Subsidies Toward Rooftop Solar Capital ExpenditureMultiple state governments are shifting their strategy on power subsidies by redirecting funds toward capital expenditure for rooftop solar systems. By subsidizing home solar installations, states aim to reduce the recurring burden of...
02 Aug 2026
Centre Releases Additional Instalment of Tax Devolution to StatesThe Union Government has released an additional instalment of tax devolution amounting to 1.09 lakh crore rupees to state governments. Currently, 41 percent of the taxes collected by the Centre is devolved to the states in 14...
July 2026
26 Jul 2026
West Bengal curtails Panchayat financial powersThe West Bengal Assembly has passed a Bill that deprives panchayat pradhans (village council chiefs) of their financial powers. The Bill was passed with 169 votes in favour and 13 against, while 32 MLAs abstained. This legislative move...
21 Jul 2026
Gujarat Tops NITI Aayog's Investment Friendliness IndexGujarat has emerged at the top of NITI Aayog's inaugural Investment Friendliness Index 2026, scoring 56.6 points. Maharashtra and Tamil Nadu secured the second and third positions respectively in this first-of-its-kind assessment of 17...
12 Jul 2026
Tamil Nadu Proposes Joint Funding for Chennai MRTS RevampThe Tamil Nadu government has urged the Union government to treat the 6,600 crore Chennai Mass Rapid Transit System (MRTS) revamp as a Central sector project. The proposed plan aims to upgrade the existing railway stations and passenger...
06 Jul 2026
GST Marks Nine Years With Import Buoyancy and Domestic LagAs the Goods and Services Tax (GST) system marks nine years of implementation, revenue collections grew by 14 percent in June 2026. However, economic experts highlight that the growth was largely driven by imports, while domestic sales...
04 Jul 2026
Financial and Concessionaire Friction Over Vizhinjam Port AgreementThe Kerala state government is raising policy concerns regarding the financial yield and operational clauses in the Vizhinjam Port agreement signed with Adani Ports. The concession agreement, executed on a...
Practise Fiscal Federalism
10 of our latest questions on this topic (out of 14).
Question 1 of 10
Under which constitutional provision is the Goods and Services Tax (GST) Council constituted in India?
Mains practice
The path to sustainable economic growth for emerging market economies in the 21st century lies at the intersection of climate resilience, fiscal efficiency, and collaborative technological frameworks. Analyze this statement in light of India's current domestic economic policies, state-level fiscal challenges, and international engagements.
15 marks
Sustaining India's economic growth and ecological stability requires a balanced approach combining robust governance institutions, sustainable resource management, and strategic international partnerships. Discuss this statement in light of recent challenges in fiscal federalism, water security, and global supply chain integration.
15 marks
Sustained long-term economic growth requires addressing structural weaknesses in fiscal governance, capital formation, and institutional regulation while adapting to changing global realities. Analyze how sub-national fiscal challenges, private investment bottlenecks, and financial sector reforms impact India's broader developmental ambitions.
15 marks
Previous years' questions
Past exam questions sorted by topic are coming here. Until then, the full papers are in our previous papers library.