The Constitution of India provides for the establishment of a Finance Commission through Article 280. The Finance Commission is a constitutional body responsible for recommending the distribution of financial resources between the central government and the state governments of India. Here are some key points regarding the constitution of the Finance Commission:
Appointment
The President of India appoints the Finance Commission every five years or at such intervals as deemed necessary. The Commission consists of a Chairman and other members as specified by the President.
Qualifications
The Chairman of the Finance Commission is usually an individual with significant experience in public affairs, finance, or economics. The other members of the Commission may include experts from various fields relevant to fiscal matters.
Role and Functions
The primary function of the Finance Commission is to make recommendations on the distribution of financial resources between the Union government and the state governments. The Commission takes into account various factors such as population, income disparities, fiscal capacity, infrastructure needs, etc., to determine the allocation of funds.
Terms of Reference
The President of India specifies the Terms of Reference (ToR) for the Finance Commission, outlining the specific aspects that the Commission needs to consider while making its recommendations. The ToR may include matters related to grants-in-aid, devolution of taxes, debt management, etc.
Consultation and Submissions
The Finance Commission consults with various stakeholders, including the central and state governments, local bodies, and other relevant entities, to gather inputs and information for its recommendations. The Commission also considers the submissions made by state governments and other interested parties.
Report and Recommendations
The Finance Commission prepares a detailed report containing its findings, analysis, and recommendations. The report is submitted to the President, who lays it before both Houses of Parliament. The recommendations of the Finance Commission are advisory in nature, and it is up to the government to accept and implement them.
Continuity
The Finance Commission operates in a continuous cycle, and a new Commission is constituted every five years or as per the discretion of the President. The recommendations of the Finance Commission play a crucial role in determining the fiscal arrangements and resource sharing between the Union and the states.
