Question

Read each of the following two statements: Assertion (A) and Reason (R) and indicate your answer using the codes given below:

Assertion (A): The recommendations of the State Finance Commission are not automatically binding on the state government.

Reason (R): The Constitution requires the Governor to lay the report before the legislature along with an 'explanatory memorandum' detailing the action taken, which implies the government has the discretion to accept, reject, or modify the recommendations.

• 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).

• The State Finance Commission (SFC) is a constitutional body established under Article 243-I and Article 243-Y of the Indian Constitution.
• Its primary role is to review the financial position of Panchayats and Municipalities and recommend measures to strengthen their financial base.
• The SFC submits its report to the Governor of the state.
• The Governor is mandated by the Constitution to lay this report, along with an 'explanatory memorandum' explaining the action taken on the recommendations, before the State Legislature.
• This 'explanatory memorandum' signifies that the State Government has the authority to decide whether to accept, reject, or modify the recommendations made by the SFC. The recommendations are advisory in nature and not legally binding.
• This provision ensures that the state government, which is democratically elected, has the final say in financial matters within the state, balancing the SFC's recommendations with the state's overall financial realities and policy objectives.
• This mechanism allows for a degree of flexibility and accountability in the devolution of financial powers to local bodies.