Question

Which of the following can be used to recover the constitutional basis and procedural powers of the State Finance Commission?

i. Article 243-I and 243-Y
ii. Code of Civil Procedure, 1908
iii. An order of the Governor
iv. A resolution by the State Legislature

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

Answer 1

Answer:

B. i & ii only

State Finance Commission: Constitutional Basis and Procedural Powers

• Constitutional Mandate: The primary source for understanding the constitutional basis and procedural powers of the State Finance Commission (SFC) lies in Articles 243-I and 243-Y of the Indian Constitution. These articles, introduced by the 73rd and 74th Constitutional Amendments, respectively, establish the SFC and define its role in relation to Panchayats and Municipalities.

• Article 243-I: This article specifically deals with the constitution of Finance Commissions to review the financial position of Panchayats. It mandates the Governor to constitute an SFC for every five years to review the financial position of Panchayats and recommend principles for distribution of net proceeds of taxes, duties, tolls and fees leviable by the State, between the State and Panchayats, and also among Panchayats at all levels.

• Article 243-Y: This article extends the provisions related to Finance Commissions to Municipalities, thereby ensuring a similar review and recommendation mechanism for urban local bodies.

• Procedural Aspects: While Articles 243-I and 243-Y lay down the constitutional framework, the procedural aspects of the SFC's functioning, including the conduct of its inquiries and the presentation of its reports, often draw from established legal frameworks. The Code of Civil Procedure, 1908, can be a relevant source for procedural guidance, particularly concerning the powers to summon witnesses, take evidence, and conduct proceedings in a manner similar to a civil court, where applicable. This ensures a degree of fairness and rigor in the SFC's investigations.

• Distinction from other sources:

  • An order of the Governor, while important for the constitution of the SFC, does not inherently provide the procedural powers or the fundamental constitutional basis.

  • A resolution by the State Legislature can enact laws or provide guidelines, but the core constitutional authority stems directly from the Constitution itself.

• Competitive Exam Focus: Candidates preparing for competitive exams should remember that the SFC is a quasi-constitutional body. Its establishment and core functions are rooted in the Constitution, while its operational procedures may be influenced by general civil procedure laws. The distinction between constitutional provisions and legislative or executive actions is crucial for understanding the SFC's powers and limitations.