March 25, 2020
Finance Commission of India
- Article 280, Part XI
- Finance Commission is a quasi-judicial body.
- It is a constitutional and autonomous body.
- It is constituted by the president of India every fifth year or earlier as he considers.
- Finance Commission was first established on 22 Nov 1951.
Composition of Finance Commission
- Finance Commission of India consists of
- 4 other members
- All are appointed by the president.
- They hold office for such period as specified by the president in his order.
- They are eligible for reappointment.
- Constitution of India authorises the Parliament to determine the qualifications and manner of selection of members.
- Parliament has specified the qualifications of Chairman
- Chairman should have experience in public affairs
- Qualifications for 4 other members
- Judge of high court or one qualified to be appointed as one
- Person who has specialised knowledge of finance and accounts of the government.
- A person who has wide experience in financial matters and in administration.
- A person who has special knowledge of economics.
Functions of Finance Commission
- Finance Commission make recommendations to President.
- Matters of recommendations
- Distribution of taxes between the Centre and the states and between states
- Parameters to giving grants-in-aid to the states by the Centre
- Measures to use consolidated fund of a state to supplement the resources of the panchayats and the municipalities.
- These measures made depend on the recommendations of state finance commission.
- Any other matter referred to it by the president related to finance.
- Till 1960, the commission also suggested the grants given to the States of Assam, Bihar, Odisha and West Bengal in lieu of export duty on jute and jute products.
- These grants were given for a temporary period of 10 years from the commencement of the Constitution.
- The commission submits its report to the president.
- President lays it before both the Houses of Parliament.
- He also submits an explanatory memorandum as to the action taken on its recommendations.
- Finance Commission of India is an advisory body.
- Recommendations made by the Finance Commission are advisory in nature.
- Those are not binding on the government.
- Role of Finance commission was undermined by the emergence of Planning Commission.
Chairman of Finance Commission
- 1st – K.C. Neogy – (1952-57)
- 14th – Y.V. Reddy – (2015-20)
- 15th – N. K. Singh – (2020-25)
- Other chairman of Finance commission of India