The question (15 marks)
Explain the constitutional scheme of Centre-State fiscal relations in India, with particular reference to the Finance Commission. Are its recommendations binding, and what is the significance of Article 281? (15 marks)
Standing MU question on Module 3 head 7. Built from chapter 19 and quick reference sheet 2.
Plan your answer on paper before you look at the authorities — issue first, then the rule, then apply it to these facts.
It tests Unit 3 · Financial Markets and Fiscal System of Economics.
Authorities you will need
- Constitution of India, Articles 280, 281 and 243-I
- Finance Commission (Miscellaneous Provisions) Act
- Sixteenth Finance Commission terms of reference, approved by the Union Cabinet on 29 November 2023, and its report submitted 17 November 2025
- Budget at a Glance 2026-2027, on transfers to States and Union Territories with legislature
How an answer is marked
A full-marks answer names the issue in one line, states the rule with its section, cites the authority, applies it to these facts and concludes — in that order. The app's model answer for this question is written in exactly that shape, with a checklist to mark your own attempt against.