The Finance Commission is an independent body constituted by the President of India to review the financial relations between the Union and the States. It is a constitutional body, and its recommendations are binding on the Union and the States.
The Finance Commission was first constituted in 1951, and it has been constituted every five years since then. The current Finance Commission is the 15th Finance Commission, which was constituted in 2020.
The Finance Commission has the following functions:
- To review the financial relations between the Union and the States;
- To make recommendations on the distribution of net proceeds of taxes between the Union and the States;
- To make recommendations on the grants-in-aid to the States;
- To make recommendations on the principles governing grants-in-aid to local bodies;
- To make recommendations on any other matter referred to it by the President in the interests of sound finance.
The Finance Commission is a powerful body, and its recommendations have a significant impact on the finances of the Union and the States. The recommendations of the Finance Commission are usually accepted by the Union and the States, and they are implemented through legislation.
The Finance Commission has played a vital role in the development of the Indian economy. Its recommendations have helped to promote fiscal federalism in India, and they have also helped to reduce regional disparities in income and development.
The Finance Commission is a unique institution in the world. It is the only body that has the power to make recommendations on the distribution of resources between the central government and the state governments. The Finance Commission has played a vital role in the development of the Indian economy, and it is likely to continue to play a significant role in the years to come.
Frequently asked questions about the Finance Commission
- What is the Finance Commission?
The Finance Commission is an independent body constituted by the President of India to review the financial relations between the Union and the States. It is a constitutional body, and its recommendations are binding on the Union and the States.
- What are the functions of the Finance Commission?
The Finance Commission has the following functions:
- To review the financial relations between the Union and the States;
- To make recommendations on the distribution of net proceeds of taxes between the Union and the States;
- To make recommendations on the grants-in-aid to the States;
- To make recommendations on the principles governing grants-in-aid to local bodies;
- To make recommendations on any other matter referred to it by the President in the interests of sound finance.
- How is the Finance Commission constituted?
The Finance Commission is constituted by the President of India. The President appoints a Chairman and four other members to the Finance Commission. The Chairman and the members of the Finance Commission are appointed from among persons who are distinguished in the field of finance, economics, law, or public administration.
- When was the first Finance Commission constituted?
The first Finance Commission was constituted in 1951. The Finance Commission has been constituted every five years since then. The current Finance Commission is the 15th Finance Commission, which was constituted in 2020.
- What are the recommendations of the Finance Commission?
The recommendations of the Finance Commission are usually accepted by the Union and the States, and they are implemented through legislation. The recommendations of the Finance Commission have a significant impact on the finances of the Union and the States.
- What has been the impact of the Finance Commission on the Indian economy?
The Finance Commission has played a vital role in the development of the Indian economy. Its recommendations have helped to promote fiscal federalism in India, and they have also helped to reduce regional disparities in income and development.
- What is the future of the Finance Commission?
The Finance Commission is likely to continue to play a significant role in the Indian economy in the years to come. The Finance Commission is a unique institution in the world, and it is the only body that has the power to make recommendations on the distribution of resources between the central government and the state governments.