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Finance Commission Notes | Study Indian Polity for UPSC CSE - UPSC

Document Description: Finance Commission for UPSC 2022 is part of Indian Polity for UPSC CSE preparation. The notes and questions for Finance Commission have been prepared according to the UPSC exam syllabus. Information about Finance Commission covers topics like and Finance Commission Example, for UPSC 2022 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Finance Commission.

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Composition

  • Art 280 provides for Finance Commission as a Quasi-judicial body.
  • It is constituted by Prez every 5th year or even earlier as required.
  • Consists of a Chairman & other members who hold office for such period as specified by Prez. They are eligible for reappointment.
  • Constitution authorises Parliament to determine qualifications for office. Accordingly, Chairman should be a person having experience in public affairs while 4 other members should be selected from following :
    ≫ A judge of HC or a judge qualified to be one.
    ≫ A person having specialised knowledge of finance & accounts.
    ≫ A person having wide experience in financial matters & in administration
    ≫ A person having special knowledge of economics.

Functions

  • Finance Commission is required to make recommendations to President on following matters :
    ≫ Distribution of net proceeds of taxes to be shared by Centre & States & the allocation of shares between states.
    ≫ Principles that should govern Grants-in-Aid to the States by Centre.
    ≫ Measures required to augment the Consolidated Fund of States to supplement resources of Panchayats & Municipalities on the basis of recommendations by State Finance Commission.
    ≫ On other matters referred to by the President.
  • Commission submits its report to the President, who lays it before the Parliament with a memorandum as to the actions taken so far.

Advisory Role

  • Recommendations made by the commission are only of an advisory nature.
  • It is upto Union Govt to accept the recommendation to share revenue from taxes with States.
  • However, since the Finance Commission is a Constitutional body of Quasi-judicial nature, its recommendations should not be turned down by the Govt unless there are very compelling reasons.
  • Constitution of India envisages the Finance Commission of playing a very important role in ensuring the fiscal balance between Centre & States & among the States themselves.
  • However, due to the establishment of the Planning Commission, now replaced by the NITI Aayog, the role of Finance Commission has been diminished to a certain degree with many planning functions overlapping between the two organisations.
The document Finance Commission Notes | Study Indian Polity for UPSC CSE - UPSC is a part of the UPSC Course Indian Polity for UPSC CSE.
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