Polity Chapters

1. Evolution of Indian Constitution2. Constituent Assembly and Making of the Constitution3. Different Sources of the Indian Constitution4. Important Articles of the Constitution5. Important Amendments of the Constitution6. Some Special features of the Indian Constitution7. Federal and Unitary features of the Indian Union8. The Preamble9. Lapse of Paramountcy10. Integration and Merger of Indian States11. The Union and its Territories12. Reorganization of States13. Citizenship14. Fundamental Rights15. Directive Principles of State Policy16. Fundamental Duties17. Procedure of Amending the Constitution18. Executive of the Union19. The Parliament of India20. President of India21. Vice President22. Prime Minister23. Council of Ministers24. Lok Sabha25. Rajya Sabha26. Vidhan Sabha27. Vidhan Parishad28. Governor29. Chief Minister30. State Council of Ministers31. The Parliament of India32. NITI Aayog33. Executive of the States34. Special Position of J and K35. Panchayats36. Municipalities37. The Supreme Court38. The High Court39. Inter-State Council40. Finance Commission41. Planning Commission42. National Development Council43. National Integration Council44. Inter State Relations45. Emergency Provisions46. Public Service Commissions47. Election48. Delimitation Commission of India49. The Official Languages50. National Symbols51. Glossary of Constitutional Terms

Finance Commission (वित्त आयोग)

“A constitutional body to distribute financial resources between the Centre and the States.”

Constitutional Provision

  • The **Finance Commission** is constituted under **Article 280** of the Constitution of India.
  • It is constituted by the **President of India every five years** or at such earlier time as he considers necessary.

Functions of Finance Commission

  • Recommend the distribution of the net proceeds of taxes between the Centre and the States.
  • Recommend the principles that should govern the grants-in-aid to states from the Consolidated Fund of India.
  • Suggest measures to augment the Consolidated Fund of a State to supplement resources of Panchayats and Municipalities.
  • Any other matter referred to it by the President in the interest of sound finance.

Composition of the Finance Commission

  • Chairman: A person having experience in public affairs.
  • Other four members: Appointed by the President and must have qualifications such as:
    • Experience in public finance
    • Knowledge of economics
    • Judicial knowledge or experience

Finance Commission Reports

  • The recommendations are **advisory in nature**, not binding on the government.
  • Each Finance Commission submits a report to the President, who places it before Parliament.
  • The report includes fiscal suggestions and recommendations for the next five years.

Finance Commissions Till Now

  • 1st Finance Commission: Constituted in 1951, chaired by K.C. Neogy
  • 15th Finance Commission: Constituted in 2017, chaired by **N.K. Singh**
  • 16th Finance Commission: To be constituted soon (expected after 2025)

Important Recommendations of 15th Finance Commission

  • Share of States in the divisible pool of taxes fixed at **41%** (reduced from 42% due to creation of J&K UT).
  • Special grants for disaster management and health sector improvement.
  • Performance-based incentives for power sector and agricultural reforms.

Previous Year Questions

  • SSC CGL 2020: Under which Article is the Finance Commission constituted?
  • Article 280
  • HSSC 2021: Who appoints the Finance Commission?
  • President of India
  • RRB NTPC 2019: What is the tenure of the Finance Commission?
  • 5 years
Did You Know? The Finance Commission ensures financial fairness in Centre–State fiscal relationships and promotes cooperative federalism.

Conclusion

The Finance Commission plays a critical role in maintaining fiscal balance between the Union and States. By making revenue-sharing recommendations, it helps ensure equitable distribution and promotes the financial stability of the country.

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