The correct answer is: a) Allocating funds to Panchayats.
The State Finance Commission (SFC) is a body constituted by the State Government to review the financial position of the Panchayats and to make recommendations to the Government on the principles that should govern the distribution of financial resources between the State and the Panchayats. The SFC also makes recommendations on the measures that should be taken to improve the financial management of the Panchayats.
The SFC is appointed by the Governor of the State on the recommendation of the Chief Minister. The SFC consists of a Chairman and four members, who are appointed by the Governor from among persons who are experts in finance, economics, law, administration or public affairs.
The SFC has to submit its report to the Government within a period of one year from the date of its appointment. The Government has to consider the recommendations of the SFC and take appropriate action within a period of six months from the date of receipt of the report.
The SFC plays an important role in ensuring that the Panchayats have adequate financial resources to carry out their functions. The SFC also helps to improve the financial management of the Panchayats.
The other options are incorrect because:
- Option b) is incorrect because the State Finance Commission does not audit Panchayat accounts. The State Audit Department is responsible for auditing the accounts of the Panchayats.
- Option c) is incorrect because the State Finance Commission does not have any role in tax policy. The State Government is responsible for formulating tax policy.
- Option d) is incorrect because the State Finance Commission does not have any role in budget preparation. The State Government is responsible for preparing the budget.