Question

Consider the following statements about the 16th Finance Commission:

1. Dr. Arvind Panagariya is the chairman of the 16th Finance Commission.

2. The Commission includes a member with specialized knowledge of economics.

3. The Commission submits its report directly to the Parliament.

• A. 1 and 2 only
• B. 1 and 3 only
• C. 2 and 3 only
• D. All of the above

Answer 1

Answer:

A. 1 and 2 only

Finance Commission in India

• The Finance Commission is a constitutional body established under Article 280 of the Constitution of India.

• Its primary role is to make recommendations on the distribution of financial resources between the Union and the States, and among the States themselves.

• The President of India constitutes the Finance Commission every five years or at such earlier time as he considers necessary.

The 16th Finance Commission

• Chairman: The 16th Finance Commission is chaired by Dr. Arvind Panagariya, a renowned economist.

• Composition: The Finance Commission typically consists of a chairman and four other members. The 16th Finance Commission includes members with diverse expertise, including specialized knowledge in economics, which is crucial for analyzing fiscal matters.

• Recommendations: The commission recommends the principles that should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India.

• Report Submission: The Finance Commission submits its report to the President of India, who then lays it before both Houses of Parliament along with an explanatory memorandum on the action taken on the recommendations. It does not submit its report directly to the Parliament.

• Terms of Reference: The 16th Finance Commission has been asked to review the current fiscal arrangements and recommend changes for the period 2026-27 to 2030-31.

• Key Focus Areas: The commission's work involves assessing the current state of public finances, recommending devolution of taxes, and suggesting measures for fiscal consolidation and prudent financial management by both the Union and the States.

Significance for Competitive Exams

• Questions often test the constitutional basis (Article 280) and the tenure (five years) of the Finance Commission.

• Knowledge of the current Chairman and key members of the latest Finance Commission is frequently asked.

• Understanding the scope of recommendations and the process of report submission is crucial.

• Candidates should be aware of the period for which the commission's recommendations are applicable.