Economics • Indian EconomyHard
Examine the fiscal federalism dynamics concerning the allocation of royalty from hydroelectric power generation between the central government, public sector undertakings, and the Government of Himachal Pradesh. Which principle governs the state's rightful share of free power?
A. Statutory provisions and Supreme Court rulings directing project developers to allocate a designated percentage of generated power as free royalty to the host state for local developmental needs✓ Correct Answer
B. Voluntary corporate donations disbursed at the discretion of private industrialists
C. International maritime law governing high seas commerce
D. Municipal property tax collections from village panchayats
💡 Solution & Explanation
Host state governments are statutorily entitled to a specified percentage of free power from hydroelectric installations as compensation for submergence, ecological impact, and utilization of local water resources. This free power can be consumed locally or sold in power exchanges to generate vital non-tax revenues. Judicial pronouncements and regulatory frameworks uphold these royalty allocations for hill states.
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