What is the Finance Commission?
The Finance Commission is constituted by the President under article 280 of the Constitution, mainly to give its recommendations on the distribution of tax revenue between the Union and the States (vertical sharing) and among the states (horizontal sharing) themselves. Two distinctive features of the Commission’s 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.
Who are the members of the Finance Commission?
Photo: Ramesh Pathania/Mint
The 13th Finance Commission was chaired by Vijay Kelkar and the other members were B.K. Chaturvedi, Indira Rajaraman, Atul Sarma and Sanjiv Misra.
How are the recommendations of the Finance Commission implemented?
Those to be implemented by an order of the President: Recommendations relating to distribution of Union taxes and duties and grants-in-aid fall in this category.
Those to be implemented by executive order: Recommendations in respect of sharing of royalty between the Centre and the states, debt relief, mode of central assistance etc. are implemented by executive order.
When was the first Commission appointed?
The First Finance Commission was constituted by the presidential order of 22 November 1951 under the chairmanship of K.C. Neogy on 6 April 1952. Thirteen Finance Commissions have been appointed so far at intervals of every five years.
Is the Finance Commission unique to India?
Most federal systems resolve the vertical and horizontal imbalances through mechanisms similar to the Finance Commission, such as Australia and Canada.