- Centre-state fiscal relations are facing mounting pressure due to changing revenue dynamics, tax devolution formulas, and expenditure obligations. - Fiscal federalism in India requires a delicate balance between central resource mobilization and state-level autonomy in public spending. - Growing debt burdens and off-budget borrowings by states call for strict adherence to fiscal responsibility frameworks. - The recommendations of upcoming Finance Commissions play a critical role in redefining vertical and horizontal tax devolution. - **Finance Commission:** A constitutional body established under Article 280 to recommend the distribution of tax revenues between the Union and states and among the states themselves. - **Reserve Bank of India:** India's central banking institution that regulates the monetary policy, currency issuance, and banking system, while also acting as a banker to the government. - **Union Government:** The central government of India operating at the national level, holding supreme legislative and executive authority over subjects specified in the Union List. - **State Governments:** Constituent sub-national administrative units in India's federal structure, responsible for governance, law and order, and public service delivery within their respective territorial boundaries. **Introduction** The editorial discusses the growing challenges and necessary structural adjustments in Centre-State financial relations, highlighting fiscal federalism, resource allocation, and debt management issues in India. **Core Issue and Detailed Points** - Centre-state fiscal relations are facing mounting pressure due to changing revenue dynamics, tax devolution formulas, and expenditure obligations. - Fiscal federalism in India requires a delicate balance between central resource mobilization and state-level autonomy in public spending. - Growing debt burdens and off-budget borrowings by states call for strict adherence to fiscal responsibility frameworks. - The recommendations of upcoming Finance Commissions play a critical role in redefining vertical and horizontal tax devolution. **Key Statutory Bodies, Acts & Concepts** - **Finance Commission:** A constitutional body established under Article 280 to recommend the distribution of tax revenues between the Union and states and among the states themselves. - **Reserve Bank of India:** India's central banking institution that regulates the monetary policy, currency issuance, and banking system, while also acting as a banker to the government. - **Union Government:** The central government of India operating at the national level, holding supreme legislative and executive authority over subjects specified in the Union List. - **State Governments:** Constituent sub-national administrative units in India's federal structure, responsible for governance, law and order, and public service delivery within their respective territorial boundaries.