The Finance Commission (Indian Polity and Governance)

Total Questions: 29

21. After the commencement of the Constitution how many Finance Commissions have been constituted? [M.P.P.C.S. (Pre) 1999]

Correct Answer: (e) 15
Solution:On November 27, 2017 the 15th Finance Commission was constituted by the Government of India under the Chairmanship of N. K. Singh. The 15th Finance commission submitted two reports the first report consisted of recommendations for the financial year 2020-21 and the final with recommendations for 2021-26. The 14th Finance Commission was formed in January 2013 under the Chairmanship of Y.V.Reddy.

22. Who among the following was the Chairman of 13th Finance Commission? [U.P.P.C.S. (Pre) 2016]

Correct Answer: (c) Y. V. Reddy
Solution:On November 27, 2017 the 15th Finance Commission was constituted by the Government of India under the Chairmanship of N. K. Singh. The 15th Finance commission submitted two reports the first report consisted of recommendations for the financial year 2020-21 and the final with recommendations for 2021-26. The 14th Finance Commission was formed in January 2013 under the Chairmanship of Y.V.Reddy.

23. Who among the following was the Chairman of 14th Finance Commission? [U.P.P.C.S. (Pre) 2016]

Correct Answer: (c) Y. V. Reddy
Solution:On November 27, 2017 the 15th Finance Commission was constituted by the Government of India under the Chairmanship of N. K. Singh. The 15th Finance commission submitted two reports the first report consisted of recommendations for the financial year 2020-21 and the final with recommendations for 2021-26. The 14th Finance Commission was formed in January 2013 under the Chairmanship of Y.V.Reddy.

24. Who has been nominated as the chairman of the 15th Finance Commission. [U.P.P.S.C. (GIC) 2017]

Correct Answer: (a) N.K. Singh
Solution:15th Finance Commission was constituted according to the provision of Article 280 by the President on 27 November, 2017.

N.K. Singh was nominated as the chairman of this commission. The tenure for the enforcement of recommendations of the 15th Finance Commission was from the year 2020 to the year 2025, but the commission submitted two reports - the first report consisted of recommendations for the financial year 2020-21 and the final with recommendations for 2021-26.

25. The Finance Commission consists of a Chairman and [U.P.P.C.S. (Spl) (Mains) 2008]

Correct Answer: (c) Four other members
Solution:The Finance Commission is a constitutional body in India established under Article 280 of the Constitution, tasked with maintaining fiscal federalism by recommending the distribution of tax revenues between the central and state governments. Constituted every five years by the President, it comprises a Chairman and four members with expertise in finance, economics, or public administration.
It recommends the sharing of net tax proceeds (e.g., income tax, GST) between the Union and states, grants-in-aid for revenue-deficient states, and measures to enhance local body resources for grassroots governance. It also advises on fiscal discipline, public expenditure, and other financial matters referred by the President.

26. Who of the following shall causes every recommendation made by the Finance Commission to be laid before each House of the Parliament? [I.A.S. (Pre) 2010]

Correct Answer: (a) The President of India
Solution:Article 281 : The President shall cause every recommendation made by the finance commission to be laid before each house of the parliament.
  • The Finance Commission of India is required to make recommendations to the President of India on the following matters:
    ∗  The distribution of the net proceeds of taxes to be shared between the Centre and the States, and the allocation between the States of the respective shares of such proceeds.
    ∗  The principles that should govern the grants-in-aid to the States by the Centre, i.e., out of the Consolidated Fund of India.
    ∗  The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and the Municipalities in the State on the basis of the recommendations made by the State Finance Commission.
    ∗  Any other matter referred to it by the President in the interests of sound finance.

27. Consider the following statements and select the correct answer from the code given below: [U.P.P.C.S. (Pre) (Re. Exam) 2015]

Assertion (A): State Finance Commission is a Constitutional body.

Reason (R): Union Finance Commission cannot recommend financial assistance to Panchayats.

Code:

Correct Answer: (c) (A) is true, but (R) is false.
Solution:According to Article 243-I of the Constitution, the Governor of a State shall, as soon as may, be within one year from the commencement of the Constitution (Seventy-Third Amendment) Act, 1992 and after that at the expiration of every fifth year, constitute a Finance Commission to review the financial position of the Panchayats and to make recommendations to the Governor. Thus, the State Finance Commission is a Constitutional body. Article 280(3) (bb) of the Constitution lays down the Finance Commission to make its recommendations with respect to the Panchayats and art under 280(3) (c) for Municipalities "on the basis of the recommendations made by the Finance Commission of the State."

28. Which one of the following statements about a State Finance Commission is true? [U.P.P.C.S. (Pre) 2015]

Correct Answer: (b) It is a Constitutional body.
Solution:The State Finance Commission is a Constitutional body. It is constituted by the Governor under Article 243-1.
  • SFCs are constitutional bodies established by states under Article 243-1 of the Indian Constitution.
  • As per Article 243-1, the Governor is required to constitute an SFC within one year from the enactment of the 73rd Constitutional Amendment Act, 1992 and every five years thereafter.
  • Mandate: Their primary role is to recommend the distribution of financial resources between the state government and its local bodies i.e., Panchayati Raj Institutions (PRIs) and urban local bodies (ULBs).
  • 15th Finance Commission on SFCs: The 15th Finance Commission recommended states establish SFCs, implement their recommendations, and submit an action report to the legislature.
  • It suggested withholding grants for states that do not comply with these requirements.
  • Role of Ministry of Panchayati Raj: It is tasked with certifying compliance by states with constitutional provisions for SFCs before the release of grants for 2024-25 and 2025-26.

29. The State Finance Commission is a- [U.P.P.C.S. (Pre) 2016]

Correct Answer: (c) Constitutional body
Solution:The State Finance Commission is a Constitutional body. It is constituted by the Governor under Article 243-1.
  • SFCs are constitutional bodies established by states under Article 243-1 of the Indian Constitution.
  • As per Article 243-1, the Governor is required to constitute an SFC within one year from the enactment of the 73rd Constitutional Amendment Act, 1992 and every five years thereafter.
  • Mandate: Their primary role is to recommend the distribution of financial resources between the state government and its local bodies i.e., Panchayati Raj Institutions (PRIs) and urban local bodies (ULBs).
  • 15th Finance Commission on SFCs: The 15th Finance Commission recommended states establish SFCs, implement their recommendations, and submit an action report to the legislature.
  • It suggested withholding grants for states that do not comply with these requirements.
  • Role of Ministry of Panchayati Raj: It is tasked with certifying compliance by states with constitutional provisions for SFCs before the release of grants for 2024-25 and 2025-26.