Question

The primary function of a State Finance Commission (SFC) is to:

• A. To advise the Governor on financial matters of the state.
• B. To audit the accounts of local self-government institutions.
• C. Recommend the distribution of state revenue between the state government and local bodies.
• D. To oversee the implementation of centrally sponsored schemes in the state.

Answer 1

Answer:

C. Recommend the distribution of state revenue between the state government and local bodies.

• The SFC's main constitutional mandate is to review the financial position of local bodies (Panchayats and Municipalities) and recommend the principles for the distribution of taxes, duties, tolls, and fees between the state and these local bodies.

• This is a core function of fiscal decentralization.