What is the Finance Commission and objectives.
What is the Finance Commission and objectives.
Or
What do you understand by Finance Commission? What are its objectives?
Ans.
Finance Commission
According to Article 280 of Indian Constitution, the President appoints a Finance Commission after every five years. This provision is also a fundamental feature of Indian Constitution which is not found in any other Constitution. The Finance Commission was appointed two years after the implementation of Indian Constitution and every five years thereafter. The President has the power to appoint a new Finance Commission even before the expiry of five years, if he deems it necessary. In other words, the appointment of the Finance Commission is a continuous process according to our Constitution. Finance Commission, generally, presents its recommendations regarding the allocation of revenue between the centre and the state so that there is no discord between the centre and the states. Main objective of the Finance Commission is to assess the financial requirements of the states to determine amount of grants in aid to be given to various states and to strengthen the Federal financial system. Various functions of the Finance Commission are as under-
Objectives/Functions of Finance Commission
(i) To determine the basis for the allocation of funds collected from the taxes which are divisible between the centre and the states.
(ii) To formulate the principles regarding the grants to the states from the centre.
(iii) To continue the agreements made between the government of India and the states, or to recommend changes in them.
(iv) To consider any other financial matter, in the interest of the country, on being notified by the President to do so.
Main objective of appointment of finance commission is to keep financial situation between the centre and the state governments balanced and to avoid any feeling of ill will between them. The success of federal constitution depends upon the success of financial relations. Generally, the state governments feel that the central government is the cause of their weakness, while the central government feels that the state governments keep on putting maximum pressure on the central exchequer. Complex financial disputes and problems between the centre and the state remain cropping up. The appointment of the Finance Commission is an important step towards a reasonable solution of these complex problems.
The Finance Commission, while keeping an eye on the requirements of the centre and the states, has to find out a way of conciliation between the two. Although it is an impossible task to satisfy all the states in a large country like India, yet a satisfactory way may be found out and a general agreement may be reached. It seems that if a scientific arrangement had not been made, an atmosphere of conflict between the centre and the states would have persisted. Such an atmosphere would have generated a number of uncertainties to the detriment of the economic and political stability of India.
