Question

The recommendations submitted by the State Finance Commission to the Governor include principles governing:

1. The sharing of net income of state-levied taxes between the Government and Panchayats.

2. The appointment of executive officers for the Panchayats.

3. The taxes, duties, cesses, and fees which may be marked for and expended by the Panchayats.

Which of the statements given above is/are correct?

• A. 1 only
• B. 1 and 3 only
• C. 2 and 3 only
• D. 1, 2 and 3

Answer 1

Answer:

B. 1 and 3 only

State Finance Commission (SFC)

• Constitutional Basis: The State Finance Commission is a constitutional body established under Article 243-I of the Constitution of India, which mandates the Governor to constitute a Finance Commission.

• Functions of SFC: The primary function of the SFC is to review the financial position of Panchayats and Municipalities and to make recommendations to the Governor regarding financial matters. These recommendations are then laid before the State Legislature.

• Scope of Recommendations: The SFC makes recommendations on principles governing:
  

  1. The distribution between the State Government and the Panchayats/Municipalities of the net proceeds of taxes, duties, tolls, and fees leviable by the State.

  2. The assignment of taxes, duties, tolls, and fees which may be levied and collected by the Panchayats/Municipalities.

  3. The making of grants-in-aid to the Panchayats/Municipalities.

  4. Measures to augment the Consolidated Fund to supplement the resources of the Panchayats/Municipalities.

  5. Any other matter referred to the SFC by the Governor in the interest of sound finance of Panchayats/Municipalities.

• Focus on Local Body Finances: The recommendations are crucial for strengthening the financial autonomy and capacity of local self-governing institutions.

• Exclusion of Executive Officer Appointment: The appointment of executive officers for Panchayats is typically an administrative function handled by the State Government or its departments, not a subject of recommendation by the Finance Commission.

• Relevance for Competitive Exams: Understanding the SFC's role and the scope of its recommendations is important for questions related to Panchayati Raj, Local Governance, and Constitutional Bodies in various competitive examinations.