Constitutional Basis
Article 275 of the Constitution of India provides for statutory grants-in-aid from the Union to certain States. These grants are charged on the Consolidated Fund of India and are mandatory in nature, unlike discretionary grants under Article 282.
Nature and Purpose
- Designed to assist States requiring financial support
- Aim to ensure fiscal equalisation among States
- Address revenue deficits and special developmental needs
- Promote balanced regional development
Article 275 embodies the principle of cooperative federalism and financial equity.
Key Features
- Statutory and constitutionally mandated
- Amounts determined by Parliament based on recommendations of the Finance Commission
- Paid annually from the Consolidated Fund of India
- Include specific provisions for Scheduled Tribes and Scheduled Areas
Role of Finance Commission
- Recommends principles governing grants-in-aid
- Assesses revenue gaps between States’ needs and available resources
- Suggests revenue deficit grants and sector-specific grants
These grants may include:
- Revenue deficit grants
- Sectoral grants for health, education, and local bodies
- State-specific and area-specific grants
Grants for Scheduled Areas and Tribal Welfare
Article 275(1) specifically provides for:
- Assistance for promoting the welfare of Scheduled Tribes
- Support for improving administration in Scheduled Areas
This strengthens constitutional safeguards under the Fifth Schedule.
Distinction from Article 282
- Article 275: Statutory and mandatory grants
- Article 282: Discretionary grants for public purposes
Significance in Fiscal Federalism
- Reduces vertical fiscal imbalance between Union and States
- Reduces horizontal imbalances among States
- Supports financially weaker and special-category States
- Enhances fiscal stability while maintaining national cohesion
Conclusion
Grants-in-aid under Article 275 are a foundational instrument of India’s fiscal federal structure. They operationalise financial equalisation, support tribal welfare, and ensure that States can deliver essential public services despite resource constraints.
