Thu Apr 09 11:39:09 UTC 2026: # UPSC Mains Answer Writing Practice Highlights Evolving Federalism and Women’s Empowerment in India

The Story:
UPSC Essentials has launched its initiative for Mains answer writing practice, focusing on essential topics of the UPSC Civil Services syllabus under various GS papers. The current practice questions cover topics related to GS-2, including the evolving role of the Finance Commission and the role of Self-Help Groups (SHGs). The Finance Commission question explores the shift in fiscal federalism, while the SHG question examines women’s empowerment and participatory governance.

Key Points:

  • The Sixteenth Finance Commission (SFC) recommendations for 2026-31 have raised concerns about the future of federal balance.
  • Changes in horizontal criteria, discontinuation of statutory grants, and the shrinking of the divisible pool have increased central leverage.
  • The SFC has effectively reduced the states’ share from around 36% to around 32%, despite retaining the share of states at 41%.
  • The SFC has significantly increased grants to the third tier (panchayats and urban local bodies) using Article 282, moving towards more condition-based discretionary transfers.
  • Self-Help Groups (SHGs) are informal, community-based financial intermediaries promoting savings, microloans, and income-generating activities.
  • SHGs play a crucial role in providing Microfinance services, empowering women, and serving as a voice for disadvantaged segments of society.
  • In Jharkhand, a network of around three lakh SHGs is facilitating women’s collective action to address climate change and livelihood challenges.
  • Government schemes like Deen Dayal Upadhyaya Antyodaya Yojana–National Urban Livelihoods Mission (DAY-NULM) and Lakhpati Didi support women-led SHGs and micro-enterprises.

Critical Analysis:
The Finance Commission’s recommendations reflect a subtle but discernible shift towards greater central control over fiscal resources. By increasing discretionary transfers to local bodies and altering the devolution formula, the central government can exert more influence over state-level priorities. This trend potentially undermines the principles of cooperative federalism, which emphasizes state autonomy and equitable resource distribution.

Key Takeaways:

  • The evolving role of the Finance Commission indicates a move towards conditional and centralized fiscal federalism in India.
  • SHGs are critical for women’s empowerment and participatory governance, particularly in addressing climate change and livelihood vulnerability.
  • The balance between vertical and horizontal devolution is shifting, reflecting changing national priorities and potentially impacting regional disparities.
  • The SFC’s recommendations raise concerns about the constitutional framework of fiscal federalism, potentially weakening the statutory backbone.
  • Empowering women through SHGs is vital for community resilience and addressing gender-specific impacts of climate change.

Impact Analysis:

The trends highlighted in the article have long-term implications for Centre-State relations and grassroots development. Increased central leverage over fiscal resources could lead to greater uniformity in development policies but might also stifle state-level innovation and responsiveness to local needs. The strengthening of local bodies through discretionary grants has the potential to improve service delivery at the grassroots level, but it also raises concerns about accountability and the potential for bypassing state governments. The continued emphasis on SHGs as agents of women’s empowerment and climate resilience is likely to drive further investment in these institutions, with potentially transformative effects on rural livelihoods and gender equality.

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