FINANCE COMMISSION OF INDIA

=> To being with understanding the importance of Finance commission of India it is mandatory to know the objective behind the establishment of this statutory body.The state is guided by the responsibility of implementing welfare schemes however the states are meagerly funded as compared to the Center.Therefore, a statutory body like that of the Finance Commission was established on whose recommendations the Center transfers funds to the state in the form of grants.This helps in the growth and the well being of the citizen of India.

=> Article 280 of the Constitution of India provides for the establishment of Finance Commission.

=> Finance Commission consists of a chairman and four other members.

=> The parliament by law determines the qualification and the manner of their selection.

=> The Finance ( Miscellaneous provisions ) Act, 1951 provides that the chairman of the commission shall be selected from among the members experienced in the public affairs.

=> The other four members from among members
(i) Who have been or qualified to be a Judge of High Court
(ii)Possess special knowledge in finance and accounts.
(iii)Have experience in financial and matters of account
(iv)Have special knowledge of economics

=>The Finance commission shall hold the office for a period as specified by the Presidential order.

=>The finance commission shall have the power of a civil Court in Summoning, enforcing attendance of witnesses, production of documents and requisitioning public record from any court or office.

=> Under Article 281 the President shall cause every recommendation made by the Finance commission to be laid before each House of the Parliament with an Explanatory memorandum.

DUTIES OF THE FINANCE COMMISSION

The finance commission shall be duty bound to make recommendations to the President as to -

A)Distribution between the Union and the state as to the net proceeds of the taxes which are to be or may be divided and allocation between the states of the respective shares of such proceeds

B)Principles which should govern the grants in aid of the revenues of the State out of the Consolidated fund of India.

C)Measures needed to augment the Consolidated funds of the state to supplement the resources of the Panchayat in the state on the recommendation made by the Finance commission of the state .
D)Measures needed to augment the Consolidated fund of the state to supplement the resources of Municipalities in the state on the recommendation made by the Finance Commission of the state.

E)In the interest of sound finance

=> Inspite of the establishment of this Statutory body there is another Political body called the planning commission which makes 70 % of the recommendation to the President. Over 70 % of grant given by Center to the State in recommendation of the planning commission are discretionary grants. Since the Planning commissions role are myriad and important it is recommended that the planning commission be made a Statutory body.

Hope this small write up helps .

Maitreyi