Polity · X-Factor Notes
The Finance Commission (Pages D301 to D306) revision notes for UPPCS Prelims.
High-Yield Revision| Concept | What to remember | Asked in UPPCS |
|---|---|---|
| Constitutional Article | The Finance Commission is provided for under Article 280 of the Constitution. | UPPCS (Pre) 2016, U.P. R.O./A.R.O. (Pre) 2016, U.P.U.D.A./L.D.A. (Pre) 2002, UPPCS (Spl) (Mains) 2008, UPPCS (Mains) 2008, UPPCS (Mains) 2010, UPPCS (Mains) 2011, UPPSC Prelims-2023 |
| Establishment & Term | Constituted by the President of India every fifth year (or earlier if necessary). It is constituted for a period of five years. | UPPCS (Mains) 2008, UPPCS (Mains) 2010, UPPCS (Mains) 2011, U.P.U.D.A./L.D.A. (Pre) 2002 |
| Nature of Body | It is established as a quasi-judicial body. | |
| Concept | What to remember | Asked in UPPCS |
|---|---|---|
| Distribution of Taxes | Recommends the distribution of the net proceeds of taxes to be shared between the Centre and States (Federal Finance). | UPPCS (Pre) 1993, UPPCS (Pre) 2006, U.P. Lower Sub. (Mains) 2013, UPPCS (Spl) (Mains) 2008 |
| Grants-in-aid | Recommends the principles governing the grants-in-aid of the revenues to the States out of the Consolidated Fund of India (Article 275). | |
| Concept | What to remember | Asked in UPPCS |
|---|---|---|
| First Finance Commission | Constituted on November 22, 1951, under the chairmanship of K.C. Neogy. | |
| 13th Finance Commission | Chairman was Vijay Kelkar. | UPPCS (Pre) 2012 |
| 14th Finance Commission |
| Composition |
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| Consists of a Chairman and four other members appointed by the President (Article 280(1)). Parliament determines the legal qualifications of the members and their selection methods. |
| UPPCS (Spl) (Mains) 2008 |
| Report Submission | The President causes every recommendation made by the Finance Commission to be laid before each House of the Parliament (Article 281). |
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| Local Bodies Finances |
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| Recommends measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities based on recommendations by the State Finance Commission. The Union Finance Commission does have a role in considering financial assistance to local bodies. |
| UPPCS (Mains) 2011 |
| Taxes on Stock/Futures Markets | Taxes on transactions in Stock-Exchanges and Futures Markets are levied and collected by the Union but are assigned to the States (Article 270). | UPPCS (Mains) 2006 |
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| Withdrawal of Money | The function of the FC does not include allowing the withdrawal of money out of the Consolidated Fund of India; this is the function of Parliament. |
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| UPPCS (Pre) 2016 |
| 15th Finance Commission | Chairman was N.K. Singh. Submitted reports covering 2020-21 and 2021-26. | U.P.P.S.C. (GIC) 2017 |
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| 16th Finance Commission | Chairperson: Dr. Arvind Panagariya, former Vice-Chairman of NITI Aayog. Members: The commission includes Ajay Narayan Jha, Annie George Mathew, Manoj Panda, and part-time member Soumya Kanti Ghosh. Ritvik Ranjanam Pandey serves as Secretary. Term: Recommendations will cover the financial years 2026-27 to 2030-31. Deadline: The Commission is expected to submit its report by October 31, 2025. Functions: Recommend distribution of net proceeds of taxes between the Union and States. Recommend principles governing grants-in-aid to States. Suggest measures to augment resources of Panchayats and Municipalities. Review financing arrangements related to disaster management. |
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| State Finance Commission (SFC) | A Constitutional body established by the Governor (Article 243(I)) every fifth year to review the financial position of Panchayats/Local bodies. | UPPCS (Pre) 2015, UPPCS (Pre) 2016, UPPCS (Pre) (Re. Exam) 2015, UPPCS (Pre) 2012, U.P. R.O./A.R.O. 2017, UPPCS (Pre) 2013 |
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| Dr. Manmohan Singh | Dr. Manmohan Singh has served as former Finance Minister, former Governor of RBI, and former Representative of India at the IMF, but not as Chairman of the Finance Commission. | U.P. Lower Sub. (Pre) 2004 |
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