Finance Commission
| Article -280 | · Quasi-judicial body after in India
· Instituted by President of India every fifth year or at earlier time as a required |
| Finance Commission Composition | Consist a chairman + 4 other members – Tenure by POI/ Reappointment eligible.
Chairman experience in public affairs 1. A judge of high court or one qualified to be appointed as one. 2. Specialised knowledge of finance & account of govt. 3. Special knowledge of economics 4. Wide experience in administration & Financial matters. |
| Functions | To make recommendation to POI, on following matters-
1. Tax allocation & distribution of tax b/w center & state 29% – 12 FC, 32- 13th FC, 14% = 42% 2. Principle that should grant in aid. 1) Fiscal Capacity – 50% 2) Population – 17.5% (till 13th) and 10% (2011) 3) Area – 15% 3. Measure needed to augment the CF of state to supplement. |
| Advisory Role | · Recommendation made by the financial commissions are only of advisory nature – therefore not binding on the government.
· Constitution envisages financial commission as a balancing wheel of fiscal federalism – till 2014 the Centre state fiscal relations was undermined by the planning commission (non-constitutional and non-statutory body) · In 2015 planning commission was replaced by NITI Aayog – National Institute For Transforming India |
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