Q. Consider the following statements with reference to the State Finance Commission:
1. It functions under the guidance of the Union Finance Commission.
2. It is constituted under the 74th Amendment Act of the Constitution.
3. They recommend principles for the devolution of funds to both the Panchayats and Municipalities.
How many of the above given statements are correct?
Exp) Option a is the correct answer.
A State Finance Commission reviews a state’s panchayats’ financial situation and provides recommendations to the governor.
Statement 1 is incorrect: State Finance Commission is created under Article 243-I of the Indian Constitution which says that the Governor of a State shall establish a Finance Commission to review the financial position of the Panchayats. It does not work under the guidance of Finance Commission established under Article 280.
Statement 2 is incorrect: Establishment of the State Finance Commission is done under Article 243-Iwhich was added through the 73rd Amendment.
Statement 3 is correct: The functions of a State Finance Commission are identical to those of the Central Finance Commission. The State Finance Commission gives recommendations on the principles which should govern the distribution between the State and the Panchayats of the net proceeds of the taxes, duties, tolls and fees leviable by the State. It also oversees the finances and suggests principles for devolution of funds for municipalities.
| Important Tips • The Governor of a State appoints a Finance Commission, every five years in accordance with Article 243-I of the Indian Constitution. • Every recommendation of the State Finance Commission and subsequent action taken by the State Government must be brought before the State legislature by the Governor. |
