Indian Polity by Laxmikant - Functions of Finance Commission (FC)

                                             Functions of Finance Commission (FC)

1.      Makes recommendations regarding division of revenues between centre – states.

2.      Makes recommendations regarding grant – in –aid to the states. Under 275, from consolidated fund of India.

3.      If also makes recommendations w.r.t allocation of resources to  local government under 73^rd , 74^th Amend.

4.      It also gives suggestion, advice to president on all financial matters which are referred to it.

5.      FC submits its report to president under (Art: 281).

àAll the functions of F.C are advisory in nature. Centre may/may not accept.

·         Usually FC acts as buffer between centre – state & hence, centre listens to FC.

·         At present 13 F.C have been completed.

·         1^st F.C was appointed in 1951, under chairmanship of K.C.Niyogi.

·         13^th under Vijay Kelkar.

Chairman’s of Finance Commission:

·         1^st F.C  - K.C. Niyogi

·         2^nd F.C - K. saantanam

·         3^rd F.C - A.K.Chanda

·         4^th F.C - Raj Mannar.

·         5^th F.C - mahaveer Tyagi

·         6^th F.C - K.Bhramananda reddy

·         7^th F.C - Shalat

·         8^th F.C - Y.V.chavan

·         9^th F.C - N.K.P.Salve

·         10^th F.C - K.C.Panth

·         11^th F.C - A.M.Khusro

·         12^th F.C - E.RangaRajan

·         13^th F.C - Vijay Kelkar

Art – 285: Central government should not impose taxes on state properties.

Art – 292: Central government can borrow loans both internally & externally. However states can borrow only domestic loans under.

Art – 293: State government borrowing through central.

à10^th F.C headed by K.C.Panth recommended alternative scheme of division of resources between centre & states.

The criteria is as follows:

• Poverty – 50% funds.
•  Population – 20% funds.
• Area – 10% funds.
• Tax – 7.5% funds.
• Fiscal – 7.5% funds.