Finance Commission, The Finance Commission of India came into existence in 1951. It was established under Article 280 of the Indian Constitution by...
The Finance Commission of India came into existence in 1951. It was established under Article 280 of the Indian Constitution by the President of India. It was formed to define the financial relations between the centre and the state.
It is the duty of the Commission to make recommendations to the President as to: the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them and the allocation between the States of the respective shares of such proceeds; 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. The Commission determines its procedure and have such powers in the performance of their functions as Parliament may by law confer on them.
The Fourteenth Finance Commission has been set up under the Chairmanship of Dr Y V Reddy, former RBI Governor. Its recommendations will cover the five year period commencing from 1st April, 2015. The 14th Finance Commission has suggested raising share of states in central taxes to 42 per cent from current 32 per cent. As per the increased devolution suggested in the report, the states will get Rs. 3.48 lakh crore in 2014-15 and Rs. 5.26 lakh crore in 2015-16. The higher tax devolution will allow states greater autonomy in financing and designing of schemes as per their needs and requirements, the report said. The Commission has recommended distribution of grants to states for strengthening duly elected gram panchayats and municipal bodies. The total grant to the local bodies including panchayats and local bodies for the five-year period ending March 31, 2020 works out to Rs 2.88 lakh crore.