The Finance Commission of India is a constitutional body that is appointed every five years by the President of India to recommend the distribution of taxes between the Central Government and the State Governments. The Commission is constituted under Article 280 of the Constitution of India.
The main function of the Finance Commission is to recommend the distribution of financial resources between the Centre and the States. It takes into account various factors, such as the revenue and expenditure needs of the States, the levels of development, the population, and other relevant factors. The recommendations of the Commission are binding on the Government of India.
The Finance Commission is also responsible for making recommendations on other financial matters, such as the grants-in-aid to be given to the States, the sharing of the proceeds of taxes collected by the Centre, and the principles that should govern the borrowing powers of the States.
The Finance Commission is composed of a Chairman and four other members who are appointed by the President. The Chairman is usually a person who has had experience in public affairs, while the other members are typically experts in economics or finance.
The recommendations of the Finance Commission are an important source of revenue for the States, and they play a crucial role in the allocation of financial resources between the Centre and the States. The Commission’s recommendations are also important in ensuring that the States have the resources they need to carry out their various developmental activities.
