How can a government attain financial autonomy?

Federalism is a form of governance which revolves around power sharing between a general government at the centre (federal' government) with regional governments (provincial, state, cantonal, territorial or other sub-unit governments) in a single political system. To illustrate this one can, use the example of India and its federal structure.


The Indian Union has a federal government. It originally was two- tier system with a Central Government and the State Governments. Later a third -tier was added for rural areas and is known as ‘Panchayati Raj’. These different tiers have separate jurisdiction as mandated by the Indian Constitution. To ensure financial autonomy the sources of revenue for both the central government and state governments are clearly specified in the constitution, which indicates their main sources of income. Following are some of the Articles listed in the Indian Constitution to promote financial autonomy.


1. Article 282 accords financial autonomy in spending financial resources available to the states for public purpose. Article 293 allows States to borrow without limit without consent from the Union government.


2. The President of India constitutes a Finance Commission every five years to recommend devolution of Union revenues to State governments.


3. Under Article 360, the President can proclaim a financial emergency when the financial stability or credit of the nation or of any part of its territory is threatened.


Thus from the above discussion, it is evident that the financial autonomy of a government under a federal system is entitled through the Constitution followed by the Government.


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