FINANCE COMMISSION (ARTICLE 280)
WHAT IS FINANCE COMMISSION?
- The Finance Commission established by the President of India to define the financial relations between the Central & State Government.
- The 1st Finance Commission was established in 1951.
- It works for
- Improving the quality of public spending.
- Promoting fiscal stability.
- It's responsibility is to
- Evaluate the finances of the Union and State Governments.
- Recommend the sharing of taxes between them.
FINANCE COMMISSION APPOINTMENT
1. It is constituted by President after every 5th year.
2. They work on the pleasure of President.
3. They can be reappointed.
FUNCTIONS OF FINANCE COMMISSION
- Distribution of taxes between Centre & State Government.
- The principle for Grant-in-aid by the Centre to the States.
- Measures to augment Consolidated Fund of a State to supplement resources of Panchayats and Municipalities.
- To advice Central Government to provide grant to State Government.
- To advice President on any financial matter whenever President asks.
QUALIFICATIONS
- Parliament may by law determine the qualifications which shall be requisite for appointment as members of the Commission and the manner in which they shall be selected.
- The Chairman of the Commission is selected from among persons who have experience in public affairs, and the four other members are selected from among persons who:
- are, or have been, or are qualified to be appointed as Judges of the High Court;
- have special knowledge in the finances and accounts of the Government;
- have had wide experience in financial matters and in administration;
- have special knowledge of economics.
DISQUALIFICATION
- Members may be disqualified if they are found to be of unsound mind, have committed a heinous act, or have a conflict of interest.
TENURE OF FINANCE COMMISSION
- The President of India specifies the term of office for Members of the Finance Commission.
- Normally, they are appointed for five years, and in some situations, the members are re-appointed.