Economy; Finance commission and Important industries

  • Finance commission –
    • Is constituted to define financial relations between the centre and the states.
    • Under provision of Article 280, President appoints a finance commission.
  • Financial relations between centre and states –
    • Article 264 and Article 293 explains the financial relations between the union and states.
    • Constitution provides residuary powers to the centre.
    • List 1st of the 7th schedule enlists the union taxes.
    • List 2nd of the 7th schedule enlists the taxes which are within the jurisdiction of the states.
    • Apart from taxes levied and collected by the state, the constitution has provided for the revenues for certain taxes on the union list to be allotted partly or wholly to the states.
  • Fourteenth finance commission –
    • Besides other things, the commission lays down principles governing the grants in aid to states and other local bodies for five year period beginning 1st April 2015.
    • Chairman was Dr. Y V Reddy.
    • Was asked to suggest on various topics such as –
      • Pricing of public utility such as electricity and water, also look into issues like disinvestment, GST compensation, sale of non profit PSUs and subsidies.
      • Measures for maintaining a stable and sustainable fiscal environment consistent with equitable growth.
      • With regard to debt stressed states, was asked to suggest steps for augmenting revenues of states which are lagging.
      • Review the present arrangements as regards financing of disaster management with reference to the funds constituted under the disaster management Act, 2005 and make appropriate recommendations there  on.
  • State finance commission –
    • It reviews the financial position of the panchayats.
    • Recommends the distribution of taxes, tolls and fees between the states and the panchayats.
    • Determines taxes, duties, tolls and fees that can be assigned to panchayats.
    • Recommends on principles to determine grant in aid to the panchayats.
  • Some important industries of India –
    • Iron and steel industry.
      • First steel industry was set up at Kulti (WB), named “Bengal iron Works Company” in 1870.
      • First large scale steel plant established is “TISCO” in Jamshedpur (1907) followed by IISCO at Burnanpur (1919), both belonged to the private sector.
      • First public sector unit was “Vishvedhvarayya Iron and Steel Works” at Bhadrawati (Karnataka).
      • At present all important steel plants are managed by SAIL except TISCO.
      • Steel authority of India (SAIL) (1974) was made responsible for the development of the steel industry.
      • Some public sector steel plants are as follows –
LocationEstablished during five year planAssistance
Rourkela (Orissa)2ndGermany
Bhilai (Chhattisgarh)2ndRussia
Durgapur (west Bengal)2ndBritish
Bokaro (Jharkhand)3rdRussia
Vishakapatnam (AP)4thRussia
Salem (Tamil Nadu)
Vijay Nagar (Karnataka)
  • Top most steel producing countries –
    • China > Japan > USA > Russia > India.
    • Cotton and textile industry.
      • Oldest industry in India and employs largest number of workers.
      • It accounts 4% of GDP, 20% of manufacturing value and 33.33% of the total export earnings.
      • First Indian modernized cotton mill was set up at Fort Gloster near Calcutta (1818), but was not successful.
      • The second mill named Bombay spinning and weaving company was set up at Bombay (1854) by K G N Daber.
    • Cement industry.
      • Production started in 1904 at Madras.
      • Foundation of stable Indian cement industry was laid in 1914, when Indian Cement Company limited started production at Porbandar (Gujarat).
      • At the end of 7th five year plan india started exporting cement.
      • At present cement is one of the most advanced industries in the country.
      • First modernized industrial unit was established at Reshra (WB) in 1955.
    • Petroleum and natural gas.
      • First successful oil well was dug in India in 1889 at Digboi (Assam).
      • For exploration purpose “Oil and natural gas commission” (ONGC) was set up in 1956 at Dehradun.
      • Oil reserve in India is estimated to be about 13 crore tonnes.
      • Currently produces 32 million tonnes against its annual demand of 105 million tonnes meeting only 30.5% of its demand.
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