C.6. Finance Commission (Devolution of Power)
A constitutional authority known as the Finance Commission is responsible for allocating specific revenue resources between the Union Government and the State Governments. It was created by the Indian President by Article 280 of the Indian Constitution. It was developed to lay forth the terms of the Center’s and the States’ financial dealings. It began in 1951.
Concerning the Finance Commission’s recommendations, the President must present each house of Parliament with the recommendation and the explanatory letter( Article 281.).
The Finance Commission is established by the President of India every five years or whenever he deems it essential.
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Important Topic
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Details
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Composition of the Indian Finance Commission
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- Chairman and Members of the Finance Commission
- The chairman is in charge of the Commission and oversees its operations. He ought to have some background in public affairs.
- 4 Members.
- The qualifications of the Commission’s members and the procedures used in choosing them are legally determined by the Parliament.
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The Finance Commission’s functions
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On the following matters, the Finance Commission advises the President of India:
- The division of net tax proceeds between the federal government and the states, as well as the distribution of those proceeds among the states.
- The guidelines by which the Center distributes grants in help to the states from the Consolidated Fund of India.
- The actions necessary to expand a state’s consolidated fund to increase the resources of its municipalities and panchayats are based on suggestions provided by the state finance commission.
- Any other issue that the president refers to is in the interest of solid financial management.
- Every five years, the Commission determines the rules governing grants-in-aid to the states as well as the basis for dividing taxes between the federal government and the states.
- The President may refer to the Commission any subject that is in the interest of prudent financial management.
- The recommendations of the Commission are presented to the Houses of Parliament together with a note explaining the government’s response to them.
- To allocate resources to the state’s Panchayats and Municipalities, the FC assesses the growth in the Consolidated Fund of the state.
- The FC has enough authority to carry out its duties within its area of responsibility.
- The FC has all the authority of a Civil Court by the Code of Civil Procedure from 1908. It has the authority to call witnesses and request the production of any public record or document from a court or office.
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