Finance Commission
About Finance Commission
- The Finance Commission is a constitutional body set up under Article 280 of the Constitution.
- Under Article 280, the President of India is required to constitute a Finance Commission at an interval of five years or earlier.
- The First Finance Commission was constituted in 1952 under the chairmanship of K.C. Neogy.
What are the qualifications for Members?
- The Finance Commission has a chairman and four members appointed by the President.
- The Chairman of the Commission is selected from among persons who have had 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 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.
What are the functions of the Finance Commission?
- It is the duty of the Commission to make recommendations to the President as to—
- the distribution of tax proceeds between the Union and the States and the share of each state.
- the principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India;
- the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats in the State on the basis of the recommendations made by the Finance Commission of the State;
- the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State;
- any other matter referred to the Commission by the President in the interests of sound finance.
Why in News?
- The Union Government has released the Fifteenth Finance Commission (XV FC) Grants during the financial year 2024–25, for the Rural Local Bodies (RLBs) of Haryana, Tripura and Mizoram.
Related Information
- In 2023, the Government of India, with the approval of the President of India, constituted the Sixteenth Finance Commission, in pursuance to Article 280 of the Constitution.
- Dr Arvind Panagariya, former Vice-Chairman, NITI Aayog has been named as Chairman.
- The Commission has been requested to make its report available by 31st October, 2025 covering a period of five years commencing on the 1st day of April, 2026.
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