Article 275

Background and evolution

In a federation, the Union usually collects more revenue than it needs, while states have larger spending responsibilities. This vertical imbalance is corrected partly by sharing central taxes and partly by grants. The Government of India Act, 1935 provided for grants to provinces, and the Constitution carried this forward in Article 275.

Grants under Article 275 are "charged" on the Consolidated Fund of India, which means they are not voted by Parliament annually once a law provides them. Parliament determines the amounts by law, and in practice it acts on the recommendations of the Finance Commission under Article 280. The article also gives a constitutional basis for grants aimed at the welfare of Scheduled Tribes and for raising the level of administration in Scheduled Areas, as well as special grants for Assam's tribal areas.

Key features and provisions

• Clause (1): Parliament may by law provide sums as grants-in-aid to states that it determines to be in need of assistance, with different sums for different states, charged on the Consolidated Fund of India.
• First proviso: grants for schemes of development undertaken by a state with the Union's approval for promoting the welfare of Scheduled Tribes or raising the level of administration of Scheduled Areas.
• Second proviso: grants to Assam for the administration of tribal areas specified in the Sixth Schedule, and for development schemes there.
• Clause (2): until Parliament makes a law, the President may by order exercise these powers after considering Finance Commission recommendations.
• Types of grants recommended by Finance Commissions: revenue deficit grants, grants to local bodies, disaster management grants, and sector-specific and state-specific grants.