The Finance Commission

11. Given below are two statements one is labelled as Assertion (A) and other as Reason (R): [U.P.P.C.S. (Pre) 2021]

Assertion (A): The President of India determines the qualifications of the Chairman and Members of the Finance Commission.

Reason (R): Chairman and members are appointed by the President of India.

Select the correct answer using the codes given below.

Codes:

(a) Both (A) and (R) are true and (R) is correct explanation of (A)
(b) Both (A) and (R) are true, but (R) is not correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true

Correct Answer: (d) (A) is false, but (R) is true

Solution:According to Article 280(1) of the Indian Constitution, the finance commission consists of total 5 members (Chairman and 4 Members) in commission. As per the finance commission miscellaneous provisions) Act, 1951, the chairman of the commission is selected from among persons who have had experience in public affairs and the four other members are selected form among person who-

(a) are, or have been, or are qualified to be appointed as Judge of a High court; or.

(b) A person who has specialised knowledge of finance and accounts of the government; or.

(c) A person who has wide experience in financial matters and in administrations; or.

(d) A person who has special knowledge of economics. It is not necessary that at least one member of commission must be Judge of High Court or Supreme Court. As per Section (6) of this Act, the Chairman of the Commission can be reappointed. K.C. Neogy was first chairman of the finance commission.

12. What is/are true in reference to the Finance Commission? [Chhattisgarh P.C.S. (Pre) 2021]

(i) There are total 5 members in Commission

(ii) At least one member of Commission must be Judge of High Court or Supreme Court

(iii) The Chairman of Commission cannot be reappointed

(iv) First Chairman of Commission was K. Santhanam

(a) (i), (ii) and (iv)
(b) (i), (ii) and (iii)
(c) (i) and (iii)
(d) Only (i)

Correct Answer: (d) Only (i)

Solution:According to Article 280(1) of the Indian Constitution, the finance commission consists of total 5 members (Chairman and 4 Members) in commission. As per the finance commission miscellaneous provisions) Act, 1951, the chairman of the commission is selected from among persons who have had experience in public affairs and the four other members are selected form among person who-

(a) are, or have been, or are qualified to be appointed as Judge of a High court; or.

(b) A person who has specialised knowledge of finance and accounts of the government; or.

(c) A person who has wide experience in financial matters and in administrations; or.

(d) A person who has special knowledge of economics. It is not necessary that at least one member of commission must be Judge of High Court or Supreme Court. As per Section (6) of this Act, the Chairman of the Commission can be reappointed. K.C. Neogy was first chairman of the finance commission.

13. With reference to Union Finance Commission, which of the following statement/s is/are correct? [U.P.P.C.S. (Pre.) 2023]

(1) Finance Commission has a Chairman and six members.

(2) It submits its report to the NITI Aayog.

Select the correct answer using the code given below:

Code:

(a) Both (1) and (2)
(b) Only (2)
(c) Neither (1) nor (2)
(d) Only (1)

Correct Answer: (c) Neither (1) nor (2)

Solution:According to Article 280(1) of the Indian Constitution, the President shall, within two years from the commencement of this Constitution and after that the expiration of every fifth year or at such earlier time as the President considers necessary, by order constitute a Finance Commission which shall consist of a Chairman and four other members to be appointed by the President Further. According to Article 280(3) of the Indian Constitution it shall be the duty of the Commission to make recommendations to the President So Neither Statement (1) nor (2) is correct. So, option (c) is the correct answer.

14. Consider the following statements: [I.A.S. (Pre) 2003]

The function (s) of the Finance Commission is/are -

1. To allow the withdrawal of the money out of the Consolidated Fund of India.

2. To allocate among the States the shares of proceeds of taxes.

3. To consider applications for grants-in-aid from States.

4. To supervise and report on whether the Union and State Governments are levying taxes in accordance with the budgetary provisions.

Which of these statements is/are correct?

(a) Only 1
(b) 2 and 3
(c) 3 and 4
(d) 1, 2 and 4

Correct Answer: (b) 2 and 3

Solution:According to Article 280(3) of the Constitution, the main functions of the Finance Commission is -

(1) To recommend the distribution of the net proceeds of taxes between the Union and the States.

(2) To determine the principles which should govern the grants in aid of the revenues to the States out of the Consolidated Fund of India.

(3) To suggest the necessary measures to increase the Consolidated Fund of the State for the development of Local bodies in the state on the basis of recommendations made by the finance commission.

(4) Any other matter referred to the Commission by the President in the interest of the sound financial administration.

It is the function of the Parliament to allow to withdraw from the Consolidated Fund of India. It is the task of the Finance Ministry to oversee whether the Union Government and the State Governments are collecting taxes according to the provisions of the budget or not. Thus only statement 2 and 3 are correct.

15. The main functions of Finance Commission is - [U.P.P.C.S. (Pre) 1993]

(a) To determine the part of States in central taxes and to determine the principles of financial aid given by the Centre to States.
(b) Financial control over States
(c) Financial control over Central
(d) None of the above

Correct Answer: (a) To determine the part of States in central taxes and to determine the principles of financial aid given by the Centre to States.

Solution:According to Article 280(3) of the Constitution, the main functions of the Finance Commission is -

(1) To recommend the distribution of the net proceeds of taxes between the Union and the States.

(2) To determine the principles which should govern the grants in aid of the revenues to the States out of the Consolidated Fund of India.

(3) To suggest the necessary measures to increase the Consolidated Fund of the State for the development of Local bodies in the state on the basis of recommendations made by the finance commission.

(4) Any other matter referred to the Commission by the President in the interest of the sound financial administration.

It is the function of the Parliament to allow to withdraw from the Consolidated Fund of India. It is the task of the Finance Ministry to oversee whether the Union Government and the State Governments are collecting taxes according to the provisions of the budget or not.

16. The Finance Commission is primarily concerned with recommending to the President about - [U.P.P.C.S. (Pre) 2006]

(a) The principle governing grants-in-aid to be given to the States.
(b) Distributing the net proceeds of the taxes between the Centre and the States.
(c) Neither (a) nor (b)
(d) Both (a) and (b)

Correct Answer: (d) Both (a) and (b)

Solution:According to Article 280(3) of the Constitution, the main functions of the Finance Commission is -

(1) To recommend the distribution of the net proceeds of taxes between the Union and the States.

(2) To determine the principles which should govern the grants in aid of the revenues to the States out of the Consolidated Fund of India.

(3) To suggest the necessary measures to increase the Consolidated Fund of the State for the development of Local bodies in the state on the basis of recommendations made by the finance commission.

(4) Any other matter referred to the Commission by the President in the interest of the sound financial administration.

It is the function of the Parliament to allow to withdraw from the Consolidated Fund of India. It is the task of the Finance Ministry to oversee whether the Union Government and the State Governments are collecting taxes according to the provisions of the budget or not.

17. With reference to the Finance Commission of India, which of the following statements is correct? [I.A.S. (Pre) 2011]

(a) It encourages the inflow of foreign capital for infrastructure development.
(b) It facilitates the proper distribution of finances among the Public Sector Undertakings.
(c) It ensures transparency in financial administration.
(d) None of the statements (a), (b) and (c) given above is correct in this context.

Correct Answer: (d) None of the statements (a), (b) and (c) given above is correct in this context.

Solution:Under Article 280(3) of the Constitution, the Finance Commission of India gives its suggestion in following the cases:

(1) Distribution of receipts of federal taxes between the Union and the States;

(2) Under Article 275 aid in the revenue of the States; and

(3) Any further topic about which the President will recommend to the Commission in the interest of economy.

(4) The measures needed to augment the consolidated fund of a state to supplement the resources of the Panchayats and the municipalities in the state based of the recommendations made by the state Finance Commission.

18. Federal Finance Commission in India relates to- [43rd B.P.S.C. (Pre) 1999]

(a) Finances among the States
(b) Finances between States and the Centre
(c) Finances between the Centre and Local Self Governments
(d) None of these

Correct Answer: (b) Finances between States and the Centre

Solution:The Federal Finance Commission in India is related to finances between the States and the Centre.

19. Who recommends the distribution of finance between Union and the States? [U.P.U.D.A./L.D.A. (Pre) 2006]

(a) Ministry of Finance
(b) Finance Commission
(c) Reserve Bank of India
(d) NABARD

Correct Answer: (b) Finance Commission

Solution:The Federal Finance Commission in India is related to finances between the States and the Centre.

20. Who was the Chairman of the Twelfth Finance Commission? [Chhattisgarh P.S.C. (Pre) 2005]

(a) A.M. Khusro
(b) K.C. Pant
(c) Montek Singh
(d) C. Rangarajan

Correct Answer: (d) C. Rangarajan

Solution:Article 280 of the Constitution of India makes provision for the formation of the Finance Commission after the expiration of every 5 years. Till now 15 Finance Commissions have been Constituted. The recommendations made by 12. Finance Commission were for the period of 2005 to 2010. Dr. C. Rangarajan, former Governor of the Reserve Bank, Ceneral was the Chairman of this Commission. The Finance Commission consists of 4 members other than the Chairman appointed by the President of India. 13 Finance Commission was set up in the chairmanship of Vijay Kelkar who submitted its report in 2010. Dr. Y.V. Reddy was the Chairman of the 14. Financial Commission (2015-2020). He submitted the commissions report on 15 December, 2014. The President causes every recommendation of the Finance Commission to be laid before each House of the Parliament.

The Finance Commission

11. Given below are two statements one is labelled as Assertion (A) and other as Reason (R): [U.P.P.C.S. (Pre) 2021]

12. What is/are true in reference to the Finance Commission? [Chhattisgarh P.C.S. (Pre) 2021]

13. With reference to Union Finance Commission, which of the following statement/s is/are correct? [U.P.P.C.S. (Pre.) 2023]

14. Consider the following statements: [I.A.S. (Pre) 2003]

15. The main functions of Finance Commission is - [U.P.P.C.S. (Pre) 1993]

16. The Finance Commission is primarily concerned with recommending to the President about - [U.P.P.C.S. (Pre) 2006]

17. With reference to the Finance Commission of India, which of the following statements is correct? [I.A.S. (Pre) 2011]

18. Federal Finance Commission in India relates to- [43rd B.P.S.C. (Pre) 1999]

19. Who recommends the distribution of finance between Union and the States? [U.P.U.D.A./L.D.A. (Pre) 2006]

20. Who was the Chairman of the Twelfth Finance Commission? [Chhattisgarh P.S.C. (Pre) 2005]

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