Grants-in-Aid under Article 275

Grants-in-aid under Article 275 are constitutional transfers from the Union to States requiring financial assistance. They supplement State revenues, help address fiscal disparities, and include grants for specified tribal welfare and administrative purposes.

Constitutional design

Under Article 275(1), Parliament may by law provide grants to States that it determines to be in need of assistance. The amounts are charged annually on the Consolidated Fund of India, and different sums may be fixed for different States.

• As charged expenditure, these grants are not submitted to the vote of the Lok Sabha, although they may be discussed under Article 113.
• The grants are commonly described as statutory grants because their authority flows from the Constitution and parliamentary law.

Purpose and Finance Commission's role

The provision enables need-based transfers rather than requiring equal grants to every State. It also authorises capital and recurring grants for approved development schemes promoting the welfare of Scheduled Tribes or raising the administration of Scheduled Areas to the level of the rest of the State.

• Under Article 280(3)(b), the Finance Commission recommends the principles governing grants-in-aid of State revenues from the Consolidated Fund of India.
• These grants support fiscal equalisation by supplementing the resources of States whose expenditure needs exceed their available revenues.

Distinction from other transfers

Article 275 grants differ from tax devolution under Article 270, which distributes a share of specified Union taxes. They also differ from grants under Article 282, under which the Union or a State may make grants for any public purpose, even beyond its legislative competence.

• Article 275 grants are need-based constitutional transfers, whereas Article 282 provides wider discretionary grant-making power.

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