Question

Which of the following authorities are explicitly mentioned in the text as having a direct role in the process of the State Finance Commission's functioning?

i. The Governor
ii. The State Legislative Assembly
iii. The Parliament of India
iv. The President of India

• A. i & ii
• B. i & iii
• C. ii & iv
• D. iii & iv

Answer 1

Answer:

A. i & ii

• Governor's Role: The Governor of a state plays a crucial role in the constitution and functioning of the State Finance Commission. As per Article 243-I of the Indian Constitution, the Governor is empowered to constitute a State Finance Commission every five years. This commission is tasked with reviewing the financial position of Panchayats and Municipalities and making recommendations to the Governor regarding the distribution of net proceeds of taxes, duties, tolls, and fees leviable by the State, assignment of taxes, duties, tolls, and fees to Panchayats and Municipalities, and grants-in-aid to them.
• State Legislative Assembly's Role: The State Legislative Assembly (Vidhan Sabha) is indirectly involved. While the Governor constitutes the Commission, the recommendations made by the State Finance Commission are laid before the State Legislative Assembly. The Assembly then deliberates on these recommendations and takes decisions on their implementation. This makes the Assembly a key body in the process of translating the Commission's advice into action.
• Exclusion of Parliament and President: The Parliament of India and the President of India do not have a direct role in the functioning of the State Finance Commission. The State Finance Commission operates within the framework of the state's governance and the Indian Constitution's provisions related to state-level financial devolution and local self-governance. Their jurisdiction is primarily at the Union level.
• Constitutional Basis: The establishment and functions of the State Finance Commission are rooted in the 73rd and 74th Constitutional Amendments of 1992, which aimed to strengthen local self-governance. These amendments introduced Articles 243-I and 243-Y, which specifically deal with the State Finance Commissions.
• Key Functions of SFC: The State Finance Commission makes recommendations on:
  • The distribution between the State and the Panchayats/Municipalities of the net proceeds of taxes which are to be divided between them and allocation of the respective shares of such proceeds to the Panchayats/Municipalities.
  • The taxes, duties, tolls and fees which may be assigned to, or appropriated by, the Panchayats/Municipalities.
  • Grants-in-aid to the Panchayats/Municipalities.