Finance commission http://www.mindmapcharts.com/index.php/notes/economy/2697-finan...
Finance commission
Finance Established to give its recommendations on distribution of tax revenues
Commission between the Union and the States and amongst the States themselves.
Two distinctive features of the Commissions work involve redressing the
vertical imbalances between the taxation powers and expenditure
responsibilities of the centre and the States respectively and equalization of
all public services across the States.
Formed 22 November 1951
Formation The Finance Commission is appointed every five years by the President
under Article 280 of the Constitution.
Composition Constituted with a chairman and four members.
Appointment Chairman of the Commission is selected from among persons who have had
of members experience in public affairs, and the four other members are selected from
among persons who;
1. are, or have been, or are qualified to be appointed as Judges of a High
Court; or
2. have special knowledge of the finances and accounts of Government; or
3. have had wide experience in financial matters and in administration; or
4. have special knowledge of economics.
Functions 1. 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;
2. The principles which should govern the grants-in-aid of the revenues
of the States out of the Consolidated Fund of India;
3. 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;
4. 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;
5. Any other matter referred to the Commission by the President in the
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interests of sound finance.
List of Finance Year of Chairman Operational
Finance Commission Establishment Duration
Commissions
First 1951 K. C. Neogy 195257
Second 1956 K. Santhanam 195762
Third 1960 A. K. Chanda 196266
Fourth 1964 P. V. 196669
Rajamannar
Fifth 1968 Mahaveer Tyagi 196974
Sixth 1972 K. 197479
Brahmananda
Reddy
Seventh 1977 J. M. Shelat 197984
Eighth 1983 Y. B. Chavan 198489
Ninth 1987 N. K. P. Salve 198995
Tenth 1992 K. C. Pant 19952000
Eleventh 1998 A.M.Khusro 20002005
Twelfth 2003 C. Rangarajan 20052010
Thirteenth 2007 Dr. Vijay L. 20102015
Kelkar
Fourteenth 2012 Dr. Y. V Reddy 20152020
FAQ 1. How are the recommendations of Finance Commission implemented?
The recommendations of the Finance Commission are implemented as
under:-
1. Those to be implemented by an order of the President:
The recommendations relating to distribution of Union Taxes and Duties and
Grants-in-aid fall in this category.
2. Those to be implemented by executive orders:
The recommendations in respect of sharing of Profit Petroleum, Debt Relief,
Mode of Central Assistance, etc. are implemented by executive orders.
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2. Is it mandatory for the Centre to accept all its recommendations?
The Constitution only requires the Centre to report to Parliament what action
it has taken on the recommendations of the Finance Commission. However,
normally the Centre accepts and implements all the recommendation of such
panels. The Constitution requires the Centre to lay an "action taken report"
in Parliament detailing implementation of the recommendations. A copy of
the report is also required to be tabled.
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