Question

Consider the following statements about the reporting procedure of the State Finance Commission:

1. The Commission submits its report with recommendations directly to the State Legislature.

2. The Governor must lay the report before the State Legislative Assembly.

3. The report must be accompanied by a memorandum explaining the action taken by the government on its recommendations.

Which of the statements given above are correct?

• A. 1 and 2 only
• B. 2 and 3 only
• C. 1 and 3 only
• D. 1, 2 and 3

Answer 1

Answer:

B. 2 and 3 only

State Finance Commission

• The State Finance Commission (SFC) is a constitutional body established under Article 243-I and 243-Y of the Constitution of India.

• Its primary role is to review the financial position of Panchayats and Municipalities and recommend measures to augment the Consolidated Fund of the State to supplement the resources of the Panchayats and Municipalities.

• Reporting Process:

  • The SFC submits its report containing recommendations to the Governor of the State, not directly to the State Legislature.

  • The Governor is constitutionally mandated to place the report, along with a memorandum explaining the action taken by the State Government on the recommendations, before the State Legislature.

  • This process ensures transparency and accountability in the functioning of the SFC and the implementation of its recommendations.

• Significance for Competitive Exams:

  • Understanding the specific reporting mechanism is crucial for exam questions related to fiscal federalism and local self-government.

  • Note the distinction between the submission of the report to the Governor and its subsequent presentation to the Legislature.

  • The requirement of an action-taken memorandum highlights the importance of follow-up and response from the government.