Finance Commission of India: An Overview

The Finance Commission is the constitutional body of India, which the country’s President forms to allocate specific revenue resources between the union and state governments. It is article 280 of the constitution of India that envisages the formation of the Finance Commission for the duration of five years. This particular constitutional body formed by the nation’s President has survived for more than 50 years on Indian soil. 

The primary purpose of forming the Finance Commission is to determine the methods and formulas essential for distributing tax proceeds between the centre and states of India. When it comes to the composition of the Finance Commission, the necessary Qualifications of the Finance Commission Chairman and Members are defined by the Indian Constitution. 

Stating the composition of the Finance Commission:

The Finance Commission, formed by the President of India, is composed of five members, including Finance Commission Chairman and Members. The chairman heads the Finance Commission and presides over finance activities. The term for which the chairman and other four members of the Finance Commission are appointed is determined by the President of India. All these members are eligible for reappointment according to the requirement. 

Qualifications of Finance Commission Chairman and Members:

When talking about the Qualifications of Finance Commission Chairman and Members, these are determined by the Parliament of India as provided by the Constitution of India. Following mentioned are the Qualifications of the Finance Commission Chairman and Members:

• Qualifications of Chairman: The candidate to be appointed as chairman of the Finance Commission must be an individual with expertise in public affairs. 
• Qualifications of other four members: When it comes to the selection of four members of the Finance Commission, they are selected from the below-mentioned list:

1. An individual must either be a high court judge or qualified to hold the same position. 
2. An individual has expertise in handling the finance and accounts of the government.
3. An individual has divergent experience in handling financial and administrative matters.
4. Any individual possessing special knowledge related to economics and similar subjects.

Apart from the qualifications mentioned above, the individual must be of sound mind and shouldn’t be involved in the vile act.

What are the functions of the Finance Commission of India?

The President of India determines the functions of the Finance Commission. Here mentioned are the functions of the Finance Commission of India:

• The Finance Commission of India is responsible for recommending the distribution of the net proceeds of taxes that are to be shared between the centre and the states, along with the distribution of tax proceeds with the inter-state. 
• The Finance Commission recommends the principles applied to govern and regulate the grants-in-aid to the Union territories and the states by the Union from the Consolidated Fund of India.
• In addition to this, it is the Finance Commission that recommends the measures required to be adopted so that the consolidation of the funds of the state can be augmented for the purpose of facilitating the supply of the essential resources to the panchayats and local bodies of the state. This aids in avoiding hindrance in their functioning. The Finance Commission can perform this particular function based on the recommendations made by the state finance commissions according to their requirements. 
• Now that it is the President of the country by whom necessary formalities related to the Finance Commission of India is carried, any matter that the President requires to be considered by the Finance Commission time and again will be taken up by the Finance Commission as the part of the functions performed by it. 
• After delivering the necessary functions being allotted to the finance Commission by India’s President, the Commission must submit the report for the same. The President further presents this particular report before the Houses of the Parliament accompanied by a memorandum explaining the required actions taken by the Commission to fulfill its functions. 

Advisory Role of Finance Commission:

When talking about the Advisory Role of the Finance Commission, the recommendations made by this constitutional body are advisory only and, therefore, can’t bind the government of India. Therefore, it is up to the decision of the government whether or not to implement the given recommendations on granting money to the states. 

In other words, ‘it is not mentioned in the Constitution of India that the government is bound to follow the recommendations of the Finance Commission or that it would amount to a legal right favouring the states receiving the money as recommended to be provided to the same states by the Finance Commission’.

Conclusion

The Finance Commission of India is constituted by the country’s President, the primary function of which is to allocate tax proceeds between the Union and state governments. When it comes to the composition of this constitutional body, there are a total of 5 members including the Finance Commission Chairman and Members. The individual being appointed as chairman or other members must be of sound mind and possess the required qualifications as specified by the constitution and President. In the above-mentioned article, you can get to know everything about the composition, role, functions, and Qualifications of Finance Commission Chairman and Members.