Eleanor Finch
The Finance Commission of India is constituted every five years by the President of India, or earlier if deemed necessary. The Commission consists of a chairman and four other members, who are appointed by the President. The Finance Commission is responsible for defining the financial relations between the central government of India and the individual state governments, and for making recommendations on the distribution of financial resources. The first Finance Commission was constituted in 1951, and the most recent 16th Finance Commission was formed on 31 December 2023.
| Characteristics | Values |
|---|---|
| Frequency of constitution | Every 5 years or earlier if necessary |
| Constituting authority | President of India |
| Composition | 1 chairman and 4 other members |
| Members' expertise | Knowledgeable in public affairs, finance, financial matters, administration, or economics |
| Members' eligibility | Eligible for reappointment |
| Members' duration | As specified in presidential order |
| Members' remuneration | Salaries and allowances as per Central Government provisions |
| Functions | Define financial relations between central government and individual state governments, make recommendations on distribution of resources, address fiscal challenges, promote social welfare, empower state governments, strengthen local self-government, and strengthen federalism |
| First constituted | 22 November 1951 |
| Latest | 16th Finance Commission constituted on 31 December 2023 |
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What You'll Learn
- The President of India constitutes the Finance Commission
- The Commission consists of a chairman and four other members
- The Commission is constituted every five years
- The Commission makes recommendations on the distribution of financial resources
- The Commission promotes social welfare and empowers state governments through fiscal federalism
The President of India constitutes the Finance Commission
The President appoints the members of the Finance Commission, which consists of a chairman and four other members. The members of the commission are appointed for the duration specified in the presidential order and are eligible for reappointment. The chairman should have public affairs experience, and the four members should be or have been qualified as High Court judges or be knowledgeable in finance, economics, or administration.
The Finance Commission is responsible for reviewing fiscal policies and recommending the distribution of resources between the central government and state governments to enhance fiscal stability and economic growth. It also deals with the devolution of unplanned revenue resources. The main function of the commission is to distribute the shares of net proceeds of taxes between the Union and the States and the allocation of the same among the States themselves.
The Finance Commission also aids in addressing contemporary fiscal challenges and the changing dynamics of the Indian economy. It promotes social welfare by recommending the principles governing the grants-in-aid to states that may not generate adequate revenue themselves for essential services like health, education, and infrastructure. This reduces fiscal imbalances and promotes social welfare.
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The Commission consists of a chairman and four other members
The Finance Commission of India is constituted by the President of India under Article 280 of the Indian Constitution. The President appoints the members of the Finance Commission every five years or earlier, if deemed necessary. The Finance Commission consists of a chairman and four other members, who are appointed by the President. The chairman should have experience in public affairs. The four members should be or have been qualified as High Court judges, or be knowledgeable in finance or experienced in financial matters and administration, or possess knowledge of economics.
The members of the commission are appointed for the duration specified in the presidential order and are eligible for reappointment. The chairman and other members of the commission hold office for the time period as specified in the order of the President. The members of the commission shall provide full-time or part-time service to the commission, as the President specifies in their order. The members shall be paid salaries and allowances as per the provisions made by the Central Government.
The primary function of the Finance Commission revolves around making recommendations on the distribution of financial resources between the Union Government and the State Governments. The Finance Commission is responsible for reviewing fiscal policies and recommending the distribution of resources between the Centre and the states to enhance fiscal stability and economic growth. It also deals with the devolution of unplanned revenue resources.
The Finance Commission is not a permanent body. So far, 15 Finance Commissions have been appointed, with the 16th Finance Commission being the latest, constituted on 31 December 2023. The first Finance Commission was constituted in 1951, and the commissions have been appointed at intervals of every five years since.
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The Commission is constituted every five years
The Finance Commission of India is constituted every five years by the President of India. The President appoints the members of the Commission, which consists of a chairman and four other members. The Finance Commission is not a permanent body and is formed to define the financial relations between the central government of India and the individual state governments.
The Commission is constituted under Article 280 of the Indian Constitution, which states that the President will constitute a finance commission within two years of the commencement of the Constitution and thereafter at the end of every fifth year or earlier if deemed necessary. The President may also constitute the Finance Commission before the expiry of five years if necessary.
The Finance Commission is responsible for making recommendations on the distribution of financial resources between the Union Government and the State Governments. This includes the distribution of the net proceeds of taxes between the Centre and the States and the allocation of the same among the States themselves. The Commission also deals with the devolution of unplanned revenue resources and the principles governing grants-in-aid to states.
So far, 15 Finance Commissions have been constituted in India, with the first being established in 1951. The most recent Finance Commission was constituted on 31 December 2023, with Arvind Panagariya as its chairman.
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The Commission makes recommendations on the distribution of financial resources
The Finance Commission of India is constituted every five years by the President of India, under Article 280 of the Indian Constitution. The President can also constitute the commission earlier than five years if deemed necessary. The commission consists of a chairman and four other members, appointed by the President. The members of the commission are chosen based on qualifications determined by Parliament and hold office for a period specified by the President, with the possibility of reappointment.
The Finance Commission plays a crucial role in India's fiscal federalism by making recommendations on the distribution of financial resources between the Union Government and the State Governments. This ensures a fair division of resources and addresses fiscal imbalances. The commission's recommendations revolve around the distribution of tax revenues and proceeds between the Centre and the States. It also deals with the allocation of grants-in-aid to the states, which are essential for funding services such as health, education, and infrastructure.
The Commission's recommendations aim to strengthen cooperative federalism and empower state governments by increasing their financial autonomy. It also works to strengthen local self-government by suggesting measures to augment the Consolidated Funds of the states, thereby ensuring that local bodies have the necessary resources to carry out their functions.
The Finance Commission also addresses contemporary fiscal challenges and the changing dynamics of the Indian economy, such as the introduction of the Goods and Services Tax (GST). It plays a vital role in fostering collaboration and dialogue between the central and state governments on financial matters, promoting a healthy federal structure.
The recommendations of the Finance Commission are of great significance in ensuring equitable distribution of resources, addressing fiscal imbalances, and promoting social welfare in India. The commission's work helps to bridge the vertical financial gaps between the Centre and the States, contributing to the country's overall economic development and social progress.
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The Commission promotes social welfare and empowers state governments through fiscal federalism
The Finance Commission of India is constituted every five years by the President of India, under Article 280 of the Indian Constitution. The President can also constitute the commission earlier than five years if deemed necessary. The Finance Commission is not a permanent body and consists of a chairman and four other members, appointed by the President. The members of the commission are eligible for reappointment.
The Commission's main function is to make recommendations on the distribution of financial resources between the Union Government and the State Governments. It also deals with the devolution of unplanned revenue resources. This ensures equitable distribution of financial resources between the Union and State Governments, promoting fiscal federalism.
The Commission promotes social welfare by recommending the principles governing the grants-in-aid to states. These grants-in-aid assist states that may not generate adequate revenue themselves for essential services like health, education, and infrastructure. This reduces fiscal imbalances and promotes social welfare.
The Commission also empowers state governments by increasing their financial resources, providing them with financial autonomy. This financial autonomy allows state governments to have more control over their resources and spending, empowering them to make decisions that best suit their needs.
Furthermore, the Commission strengthens local self-government by suggesting measures to augment the Consolidated Funds of the states. This ensures that local bodies, such as Panchayats and Municipalities, have adequate resources to perform their constitutionally mandated functions.
The Finance Commission plays a crucial role in fostering cooperation and dialogue between the central and state governments on financial matters, promoting a healthy federal structure. It aids in addressing contemporary fiscal challenges and the changing dynamics of the Indian economy, such as the introduction of the Goods and Services Tax (GST). By facilitating fiscal federalism, the Commission ensures the equitable distribution of resources and enhances fiscal stability and economic growth.
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Frequently asked questions
The Finance Commission is constituted by the President of India. The Governor constitutes the Finance Commission for a State.
The Finance Commission is constituted every five years or at such earlier times as the President of India considers necessary.
The Finance Commission consists of a chairman and four other members.
