Central Financial Assistance to Indian States

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The Indian states depend on the central government for an overall infrastructural, industrial and social and economic development. Different committees are formed to suggest plans for development along with Central Financial Assistance to Indian States.

The Finance Commission of Chhattisgarh also fulfills various other objectives that lead to the development of the state.

Central Financial Assistance to Indian States - Overview:

The Finance Commission does the disbursement of funds to the states in accordance with the recommendations. Central Financial Assistance to Indian States are offered through the Financing Scheme of State's Annual Plan.

There are three levels of the central financial assistance plans. The regular financial assistance provided by the central government to the individual states rank under the Financing Scheme of State's Annual Plan. The calculations done for such assistance is based on a unique formula referred to as the Gadgil Mookherjee formula. The second head comprises of the additional central assistance for the purpose of EAP. The third head involves assistance for schemes that require the central government to carry on their supervision. The schemes occurring under the third head, target social development within the Indian states through:
  • Additional Central Assistance for Slum Development Schemes (SDS)
  • National Social Assistance Programme (NSAP)
  • Pradhan Mantri Gramodya Yojana (PMGY)
Schemes for infrastructural development within the Indian states:
  • Rural Electrification
  • Accelerated Power Development Reform Programme (APDRP)
  • Additional Central Assistance for roads and bridges
  • Hill Area Development Programme
Schemes for agricultural development in the Indian states:
  • Control of Shifting Cultivation
  • Additional Central assistance for shifting cultivation
  • Accelerated Irrigation Benefit Programme (AIBP)
Schemes for special projects:
  • Western Ghats Development Program (WGDP)
  • Tribal Sub Plan
  • Border Area Development Programme
  • Development Reform Facility (DRF)
  • Border Area Development Programme (BADP)
Detailed Analysis of Financial Schemes:

The Tribal Sub Plan scheme strive to improve the quality of life of the backward classes especially the scheduled tribes. In the year 1994, the 20-point program benefited a number of scheduled tribes financially. Two significant organizations have been developed for the further up gradation of the schedule tribes such as:
  • Tribal Cooperative Marketing Development Federation of India (TRIFED)
  • National Backward Class Finance and Development Corporation
In the year 1996-97 the central government announced the Accelerated Irrigation Benefit Programme (AIBP) in order to hasten the existing irrigation projects as well as multi purpose projects. Central Financial Assistance to Indian States in lieu of irrigation projects included those projects whose fund requirements crossed the resource capability of the respective states, and also those projects that would in turn accelerate the irrigation process in the coming years.

For further information on State Finance Commissions, please refer to the following sites