Finance Commission
- It is Constitutional body established under Article 280
- President establishes every 5 years
- Quasi Judicial body
- These are not the courts
- They have the powers analogous to law imposing bodies
- They take away the burden from courts
- Limited area of power
- Judgement based on pre-determined set of rules
- Composition
- Chairman having experience in Public affairs
- A judge of Hugh court or one qualified to be appointed as one
- Who has specialised knowledge of finance and accounts of Government
- Who has wide experience in Financial matters and in administration
- A person who has special knowledge of economics
- Parliament will determine the qualifications of members of the Commission and the manner of elections
- They are appointed by the President
- They hold office for such period as specified by the President in his order
- They are eligible for reappointment
- Functions
- Make recommendations to President on following matters
- The distribution of net proceeds of taxes to be shared between the Centre and States
- The principles that should govern the grants in aid to the states by Centre
- Measures needed to augment the Consolidated Fund of State to supplement the resources of Panchayats and Municipalities in the state on basis of recommendations made by State Finance Commission
- Any other matter referred to it by President in the interests of sound finance
- Till 1960, the commission also suggested the grants give to the States Assam, Bihar, Odisha, WB in lieu of assignment of any share of the net proceeds in each year of export duty on jute and jute products
- These grants were to be given for a temporary period of 10 years from the commencement of Constitution
- The Commission submits its report to President, he lays it before both the Houses of Parliament along with an explanatory memorandum as to the action taken on its recommendation
- Advisory Role
- The recommendations made by Finance Commission are only of Advisory nature and hence not binding on Government
- As rightly observed by PV Rajamannar, the Chairman of 4th Finance Commission “Since the Finance Commission is a constitutional body excepted to be quasi judicial, its recommendations should not be turned down by the Government unless there are very compelling reasons”
- The Constitution envisages the Finance commission as the balancing wheel of fiscal federalism in India
- 15th Finance Commission
- Constituted in November 2017
- Will give recommendations in 2020
- Chairman : Nand Kishore Singh