What is a Finance Commission?

The Finance Commission seems to be a legally mandated authority or an organisation which oversees fiscal federalism. Their primary role, as outlined throughout Article 280 in the Constitution, seems to be to monitor the condition of the Union’s as well as state governments’ budgets, propose the task of tax sharing among parties, as well as establish the basic principles governing the administration of these fees across states. 

Their activities seem to be generally defined by comprehensive and frequent engagements within all branches of administration, reinforcing the shared federalism ideal. These ideas also seek to improve the quality of government expenditure on public welfare while simultaneously maintaining financial sustainability. The first Finance Commission seems to have been established in 1951, and after that, there seems to have been a total of fifteen finance commissions. All fifteen of them have gone through their own set of difficulties.

The Fifteenth Finance Commission seems to have been established on November 27, 2017, because the dissolution of the planning commission and the implementation of a new programme called goods and services tax (GST) has dramatically altered government economic activities and relations.

The present Committee’s Terms of Reference include suggesting effective surveillance as well as performance targets for significant national vital initiatives, including exploring the potential of establishing a permanent non-lapsable financing mechanism supporting India’s military demands.

The division of Jammu and Kashmir into the two Union Territories called Jammu and Kashmir and another for Ladakh seems to have created few new dynamics. But, in general, the Finance Commission is faced with unique issues as our national politics progresses. As a crucial legislative body, the Commission is devoted to fairly evaluating the conflicting reports and interests across all different tiers of government.

Functions and the members of the finance commission:

The Finance Commission of India consists of a total of five members, including one Chairman as well as four assisting commissioners. Everyone on the committee seems to be appointed by India’s President, who also decides on their tenure within the office. In any case whatsoever, these members remain vulnerable to re-appointment whenever needed. The Indian Constitution places the responsibilities regarding setting the requirements as well as the mode of recruitment for members of the Finance Commission on the shoulders of the Parliament. Basic qualifications required by Parliament for the Chairperson as well as representatives of the Commission are listed below:

• The Finance Commission of India seems to have been entrusted with specific powers by the President of India. Most of these tasks revolve around the proposals the Commission needs to present to the country’s President. The following are the responsibilities assigned to Finance Commission:
• The Finance Commission seems to be responsible for recommending the allocation of the financial amount generated from the taxes intended to be distributed among the Union and the states and the interstate division.
• The Finance Commission also mentions the guidelines that should govern the Union’s aiding facilities; this is done from the Consolidated Fund of India.
• The Commission guides strategies that the state needs to adopt to enhance the state’s consolidated budget, which will make it easier to give the necessary finances to panchayat institutions and local municipalities in the state while will help in avoiding obstructing their functioning. The Commission seems to be responsible for carrying out this job, with the guidelines of the state’s finance commissioners.

Article 280 and its relation to the finance Commission:

The following are the essential points of article 280:

• The President can establish a Finance Commission that consists of 5 members, namely, a Chairman and other four members that are to be appointed by the President themselves, within two years of the initiation of this Constitution, or after the period of five years where new elections are held or at an early period that the President deems necessary.
• The requirements regarding a position as representative and how the representatives are to be selected may be determined by legislation or within the Parliament.
• The Commission will decide its approach and have all those powers that the Parliament will provide them to carry out their duties.

Conclusion

The article explains in brief about the finance committee as well as their roles and duties. These roles and duties are crucial to every country as they help manage the economy and budgets regarding activities of the government in power. The article also touches on key points such as article 208 is related to the finance commission.