Composition, functions and role of Finance Commission
Q. Which of the following are true regarding the Finance Commission?
1) The Chairman should be a judge of High Court or one qualified to be appointed a judge of High Court.
2) It consists of 4 other members apart from Chairman.
3) It is a quasi judicial body.- Published on 14 Mar 17a. 3
b. 1, 2
c. 2, 3
d. All of the above
ANSWER: 2, 3
Finance Commission and its Composition -
- Article 280 deals with formation of Finance Commission.
- It is envisioned as a quasi judicial body.
- The President constitutes once every five years or at such earlier time as he considers necessary.
- The Commission consists of a Chairman and four other members.
- They are appointed by the President.
- They hold office for a period specified by the President.
- They can be re-appointed.
- As per the Constitution, the Parliament can determine the qualifications of members of the commission and also the method in which they should be selected.
The Parliament has specified following qualifications -
- The chairman should be a person having experience in public affairs.
The other 4 members should be selected from amongst the following -
1. A judge of high court or one qualified to be appointed as a judge of High Court.
2. Person with knowledge of Government finances or accounts.
3. Person with experience in administration and financial expertise.
4. Person with special knowledge of economics.
Functions -
It shall be the duty of the Commission to make recommendations to the President as to -
1. The distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them and the allocation between the States of the respective shares of such proceeds.
2. The principles which should govern the grants-in-aid of revenues of the states out of the consolidated fund of India.
3. The measures needed to augment the consolidated fund of a state to supplement the resources of the Panchayats in the state on the basis of the recommendations made by the State Finance Commission.
4. The measures needed to augment the consolidated fund of a state to supplement the resources of the municipalities in the state on the basis of the recommendations made by the State Finance Commission.
5. Any other matter referred to the Commission by the President in the interests of sound finance.
- Article 281 - The President shall cause every recommendation made by the Finance Commission to be laid before each House of Parliament, together with an explanatory memorandum as to the action taken thereon.
Advisory Role -
- Recommendations made by Finance Commission are only of advisory nature.
- They are not binding on the government.
- Union Government to implement its recommendations on granting money to the states.
- D. D. Basu observed that, it is nowhere laid down in the Constitution that the recommendations of the commission shall be binding upon the Government of India or that it would give rise to a legal right in favor of the beneficiary states to receive the money recommended to be offered to them by the Commission.
- Dr. P. V. Rajamannar, the Chairman of the Fourth Finance Commission observed that, “Since the Finance Commission is a constitutional body expected to be quasi-judicial, its recommendations should not be turned down by the Government of India unless there are very compelling reasons”.
