Solution:The Finance Commission is a constitutional body while the Planning Commission was a non-constitutional body. Hence, statement of option (a) is incorrect.Finance Commission determines the method and formula for distributing the tax proceeds between the Centre and States, and among the States as per the constitutional arrangement and present requirements. It recommends grants to States on revenue account under Article 275 of Indian Constitution. While the Planning Commission was responsible to formulate Five Year Plans for social and economic development of India, which needed the review of both capital and revenue requirements of the States. Hence, statement of option (b) is correct.
The Finance Commission Rules, 1951, lay down the criteria for being members of the constitutional body: those having special knowledge of finance and accounts of government with wide knowledge and experience in financial matters and in administration, or with special knowledge of economics, and those who have been qualified to be appointed as a judge of a High Court. Therefore, any member of the erstwhile Planning Commission holding the above eligibility could also become a member of the Finance Commission. Over a period of time the working of both the institutions led to friction among them due to lack of clear-cut guidelines demarcating their areas of work. Citing the overlap of Finance Commission with the Planning Commission and the resultant anomalies, the Second Finance Commission stated that it had become a "statutory body with limited functions". This constitutional debasement ended on 1 January, 2015, when the Planning Commission was dissolved. Thus, statements of option (c) and (d) are incorrect.
