The Finance Commission in India came into force in 1951 with introduction of “The finance commission (miscellaneous provisions) act, 1951”. The Article 280 of Constitution of India provides the constitutional status to Finance Commission. It provides the framework for financial transfers from the Union to the States.
The Constitution of India provides for the appointment of finance commission after every five years, even though new finance commission can earlier be appointed by the President of India
Members of Finance Commission
The Finance Commission consists of Chairman having experience in public affairs and four other members who:
- are qualified to be appointed as Judges of a High Court; or
- have special knowledge of the finances and accounts of Government; or
- have had wide experience in financial matters and in administration; or
- have special knowledge of economics.
Every member of the Commission shall hold office for such period as may be specified in the order of the President appointing him.
Responsibilities of Finance Commission
The main responsibilities of a Finance Commission are:
- The distribution between the Union and the States of the net proceeds of taxes which are to be divided between them and the allocation between the States of the respective shares of such proceeds.
- Determination of principles and quantum of grants-in-aid to States which are in need of such assistance.
- Measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State.
Following the seventy third and seventy fourth amendments to the Constitutions, the Finance Commissions were charged with the additional responsibility of recommending measures to augment the Consolidated Fund of a State to supplement the resources of local bodies
To enable the Commission to discharge its responsibilities in an effective manner, the Constitution vests the Finance Commission with power to determine its procedures.
Grants-in-aid
It is the quantum of grants to the State which are in need of assistance.
Previous Finance Commissions
There are fourteen finance commission constituted by government since independence as per details below:
| Finance Commission |
Chairman |
Period |
| First |
K. C. Neogy |
1952-57 |
| Second |
K. Santhanam |
1957–62 |
| Third |
A. K. Chanda |
1962–66 |
| Fourth |
P. V. Rajamannar |
1966–69 |
| Fifth |
Mahaveer Tyagi |
1969–74 |
| Sixth |
J. M. Shelat |
1974–79 |
| Seventh |
K. Brahmananda Reddy |
1979–84 |
| Eighth |
J. M. Shelat |
1984–89 |
| Ninth |
Y. B. Chavan |
1989–95 |
| Tenth |
N. K. P. Salve |
1995–2000 |
| Eleventh |
A. M. Khusro |
2000–2005 |
| Twelfth |
C. Rangarajan |
2005–2010 |
| Thirteenth |
Dr. Vijay L. Kelkar |
2010–2015 |
| Fourteenth |
Dr. Y. V Reddy |
2015–2020 |
| Fifteenth |
N.K. Singh |
2020–2015 |
Various Articles related to Finance Commission
| Article |
Purpose |
| 268. |
Duties levied by the Union but collected and appropriated by the States. |
| 269. |
Taxes levied and collected by the Union but assigned to the States. |
| 270. |
Taxes levied and collected by the Union and distributed between the Union and the States. |
| 271. |
Surcharge on certain duties and taxes for purposes of the Union. |
| 274. |
Prior recommendation of President required to Bills affecting taxation in which States are interested. |
| 275. |
Grants from the Union to certain States. |
| 280. |
Finance Commission. |
| 281. |
Recommendations of the Finance Commission. |
| 282. |
Expenditure defrayable by the Union or a State out of its revenues. |
References
http://fincomindia.nic.in/