State Finance Commission

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<–2/”>a >The State Finance Commissions are required to recommend financial support from the state and principles for determination of taxes, tolls and fees that could be assigned to or appropriated by the local bodies

ARTICLE 243I of the Indian Constitution prescribes that the Governor of a State shall, as soon as may be within one year from the commencement of the Constitution (Seventy-third Amendment) Act, 1992, and thereafter at the expiration of every fifth year, constitute a Finance Commission to review the financial position of the Panchayats and to make recommendations to the Governor as to

The principles which should govern

 

  1. The distribution between the State and the Panchayats of the net proceeds of the taxes, duties, tolls and fees leviable by the State, which may be divided between them under this Part and the allocation between the Panchayats at all levels of their respective Shares of such proceeds;
  2. The determination of the taxes, duties, tolls and fees which may be assigned as, or appropriated by, the Panchayats;
  3. The grants-in-aid to the Panchayats from the Consolidated Fund of the State;

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A State Finance Commission (SFC) is a body constituted by the State Government to review the financial position of the state and to make recommendations for the devolution of financial Resources between the state and local governments. The SFC is also responsible for making recommendations on the principles governing grants-in-aid to local governments.

The composition of the SFC varies from state to state. However, the SFC typically consists of a chairman, a vice-chairman, and a few members. The chairman is usually a retired judge of The Supreme Court or the High Court. The vice-chairman is usually a retired senior bureaucrat. The members of the SFC are usually experts in the fields of finance, economics, and Public Administration.

The functions of the SFC are to:

  • Review the financial position of the state;
  • Make recommendations for the devolution of financial resources between the state and local governments;
  • Make recommendations on the principles governing grants-in-aid to local governments;
  • Review the working of the local governments and make recommendations for their improvement;
  • Any other function that may be assigned to it by the state government.

The powers of the SFC are to:

  • Call for such information from the state government and local governments as it may deem necessary;
  • Require the attendance of any person and examine him on oath;
  • Require the production of any document;
  • Inspect any office or place.

The procedure of the SFC is to be determined by the state government. However, the SFC is usually required to hold public hearings and to invite suggestions and objections from the public before making its recommendations.

The SFC is required to submit its report to the state government within a specified period of time. The state government is required to consider the recommendations of the SFC and to take appropriate action.

The implementation of the recommendations of the SFC is the responsibility of the state government. The state government is required to take appropriate action to ensure that the recommendations of the SFC are implemented in a time-bound manner.

The review of the working of the SFC is the responsibility of the state government. The state government is required to review the working of the SFC at regular intervals and to take appropriate action to improve its functioning.

The SFC plays an important role in the devolution of financial resources between the state and local governments. The SFC’s recommendations on the devolution of financial resources help to ensure that local governments have adequate resources to carry out their functions. The SFC also plays an important role in the review of the working of the local governments. The SFC’s recommendations on the improvement of the working of the local governments help to improve the delivery of Services to the people.

What is a State Finance Commission?

A State Finance Commission is a body established by a state government to review the state’s finances and make recommendations for improving them.

What are the functions of a State Finance Commission?

The functions of a State Finance Commission include:

  • Reviewing the state’s finances
  • Making recommendations for improving the state’s finances
  • Advising the state government on financial matters
  • Monitoring the implementation of its recommendations

How is a State Finance Commission appointed?

A State Finance Commission is appointed by the state government. The members of the commission are usually appointed from among people who have expertise in finance or economics.

What is the term of office of a State Finance Commission?

The term of office of a State Finance Commission is usually five years.

What is the Quorum for a State Finance Commission?

The quorum for a State Finance Commission is usually two-thirds of the members.

What are the powers of a State Finance Commission?

The powers of a State Finance Commission include:

  • The power to summon witnesses
  • The power to require the production of documents
  • The power to conduct inquiries
  • The power to make recommendations

What are the duties of a State Finance Commission?

The duties of a State Finance Commission include:

  • To review the state’s finances
  • To make recommendations for improving the state’s finances
  • To advise the state government on financial matters
  • To monitor the implementation of its recommendations

What are the reports of a State Finance Commission?

The reports of a State Finance Commission are usually made public. The reports are often used by the state government to make decisions about the state’s finances.

What is the impact of a State Finance Commission?

The impact of a State Finance Commission can be significant. The recommendations of a State Finance Commission can lead to changes in the state’s finances. These changes can have a positive impact on the state’s economy and on the lives of its citizens.

  1. The Finance Commission is a body constituted by the President of India to review the financial position of the Union and the States and to make recommendations to the President on the following matters:

(a) The distribution of net proceeds of taxes between the Union and the States;

(b) The principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India;

(c) The measures needed to augment the Consolidated Fund of a State to supplement its resources for meeting the expenditure on schemes of development;

(d) The measures needed for improving the financial position of the Union and the States; and

(e) Any other matter referred to the Commission by the President in the interests of Sound finance.

  1. The Finance Commission is constituted every five years. The present Finance Commission is the 15th Finance Commission.

  2. The Finance Commission is composed of a Chairman and four other members. The Chairman is appointed by the President of India. The other members are appointed by the President of India on the recommendation of the Prime Minister.

  3. The Finance Commission submits its report to the President of India. The President of India places the report of the Finance Commission before the Parliament.

  4. The recommendations of the Finance Commission are not binding on the Union and the States. However, the Union and the States are expected to take into account the recommendations of the Finance Commission while making their financial arrangements.

  5. The Finance Commission has played a significant role in the development of the Indian economy. The recommendations of the Finance Commission have helped to improve the financial position of the Union and the States. The recommendations of the Finance Commission have also helped to promote Economic Development in the country.

  6. The Finance Commission has been praised for its work. The Finance Commission has been described as a “model” for other countries. The Finance Commission has also been described as a “success story”.

  7. However, the Finance Commission has also been criticized. The Finance Commission has been criticized for its lack of transparency. The Finance Commission has also been criticized for its lack of accountability.

  8. Despite the criticism, the Finance Commission remains an important institution in the Indian economy. The Finance Commission is expected to continue to play a significant role in the development of the Indian economy.

  9. The following are some of the key recommendations of the 15th Finance Commission:

(a) The Finance Commission has recommended that the share of the States in the net proceeds of taxes be increased from 42% to 44%.

(b) The Finance Commission has recommended that the States be given more flexibility in the use of their funds.

(c) The Finance Commission has recommended that the States be given more powers to raise their own revenues.

(d) The Finance Commission has recommended that the States be given more powers to borrow Money.

(e) The Finance Commission has recommended that the States be given more powers to spend money.

  1. The recommendations of the 15th Finance Commission are expected to have a significant impact on the Indian economy. The recommendations are expected to help to improve the financial position of the States. The recommendations are also expected to help to promote economic development in the States.
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