Question

Regarding the qualifications for membership in the Finance Commissions, which of the following statements is accurate?

• A. The chairman of the Central Finance Commission and the chairman of the State Finance Commission must both have experience in public administration.
• B. Any member of the Central Finance Commission must be a person who is qualified to be appointed as a judge of a High Court.
• C. The State Finance Commission requires one member to have special knowledge in financial matters and economics, while the other two can have experience in public or local administration.
• D. The qualifications for members of both commissions are determined by the President and Governor in their respective orders of appointment.

Answer 1

Answer:

C. The State Finance Commission requires one member to have special knowledge in financial matters and economics, while the other two can have experience in public or local administration.

Finance Commissions in India

• Constitutional Basis: Finance Commissions are established under Article 280 of the Indian Constitution. They are quasi-judicial bodies appointed by the President of India.

• Role of Central Finance Commission: The Central Finance Commission primarily advises the President on the distribution of net proceeds of taxes between the Union and the States and the allocation of the same among the States. It also recommends principles governing grants-in-aid to States.

• State Finance Commissions: Article 243-I and 243-Y of the Constitution provide for the establishment of State Finance Commissions. These commissions make recommendations to the Governor regarding the distribution of financial resources between the State and the Panchayats/Municipalities.

• Qualifications for Members:

  • The Constitution does not specify the exact qualifications for the members of the Central Finance Commission. However, it states that the President shall appoint members who are qualified. Generally, members are chosen for their expertise in economics, finance, public administration, and law.

  • For State Finance Commissions, the qualifications can vary by state, but typically include:

    • A judge of a High Court (or qualified to be one).

    • Persons with special knowledge or practical experience in financial matters and economics.

    • Persons with experience in public administration, local government, or accounts.

• Importance in Federal Structure: Finance Commissions play a crucial role in maintaining fiscal federalism and ensuring a balanced financial relationship between the Union, States, and local bodies.

• Exam Focus:

  • Candidates should be aware of the constitutional articles related to Finance Commissions (Central and State).

  • Understanding the advisory nature of these bodies is important.

  • The composition and general qualifications for members are frequent questions in competitive exams.