Question

Given below are two statements, Assertion (A) and Reason (R).

Assertion (A): The State Finance Commission has the power to require any person to furnish information on relevant matters.

Reason (R): This power is crucial for the Commission to conduct a comprehensive and evidence-based review of the financial position of the Panchayats.

Choose the correct answer from the options given below:

• A. Both (A) and (R) are true and (R) is the correct explanation of (A).
• B. Both (A) and (R) are true, but (R) is not the correct explanation of (A).
• C. (A) is true, but (R) is false.
• D. (A) is false, but (R) is true.

Answer 1

Answer:

A. Both (A) and (R) are true and (R) is the correct explanation of (A).

State Finance Commission

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

• Key Role: The primary role of the SFC is to review the financial position of Panchayats and Municipalities and recommend measures to strengthen their financial health.

• Power to Call for Information:

  • The Assertion (A) correctly states that the SFC has the authority to require any person to furnish information relevant to its functions.

  • This power is essential for gathering data on revenue receipts, expenditure patterns, and other financial matters of local bodies.

• Importance of Information:

  • Reason (R) accurately highlights that this power is vital for the SFC to conduct a thorough and evidence-based review.

  • Accurate and comprehensive data allows the SFC to make informed recommendations on resource allocation, devolution of funds, and fiscal management for Panchayats.

  • This ensures that recommendations are practical and effective in improving the financial autonomy and functioning of local governments.

• Broader Context:

  • The SFC's recommendations influence the distribution of state taxes, duties, tolls, and fees between the state government and local bodies.

  • It also advises on grants-in-aid to Panchayats and Municipalities.

  • The effectiveness of the SFC is directly linked to its ability to access reliable financial data from various sources.