Question

Consider the following statements about the State Finance Commission’s powers:

1. The Commission can requisition public records from any office.

2. The Commission determines the taxes that panchayats can levy and expend.

3. The Commission’s members are appointed by the President of India.

• 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

State Finance Commission (SFC)

• Constitutional Basis: The State Finance Commission is a constitutional body established under Article 243-I and 243-Y of the Constitution of India. It is mandated to review the financial position of Panchayats and Municipalities in the state.

• Requisition of Records: As per the powers granted, the SFC has the authority to requisition public records from any government office or authority within the state. This is crucial for assessing the financial health and resource allocation of local bodies.

• Panchayat Taxation Powers: A key function of the SFC is to recommend the distribution of taxes, duties, tolls, and fees between the state and the Panchayats. It also determines the taxes, duties, tolls, and fees that Panchayats are empowered to levy and collect, ensuring fiscal autonomy at the local level.

• Appointment of Members: The members of the State Finance Commission are appointed by the Governor of the respective state, not the President of India. This reflects the state-level jurisdiction of the commission.

• Tenure and Qualifications: The tenure and qualifications of the members are determined by the state legislature. They typically consist of a chairperson and other members with expertise in finance, economics, and public administration.

• Recommendations: The SFC makes recommendations to the Governor regarding measures needed to augment the consolidated fund of the Panchayat to supplement the resources of the Panchayats in the state. These recommendations are laid before the State Legislature.

• Comparison with Central Finance Commission: While the Finance Commission (Article 280) deals with the distribution of revenues between the Union and the States, the State Finance Commission focuses on the financial relations between the State and the Panchayats/Municipalities.