Question

Which of the following statements about the State Finance Commission are correct?

1. The State Finance Commission consists of up to three members, including the Chairman.

2. The Commission has the power to summon witnesses and requisition public records.

3. The State Finance Commission submits its report to the President of India.

4. The Governor appoints members, who may serve on a part-time basis.

• A. 1, 2, and 4
• B. 1 and 3
• C. 2 and 3
• D. 3 and 4

Answer 1

Answer:

A. 1, 2, and 4

State Finance Commission

Constitutional Basis:

• The 73rd Constitutional Amendment Act of 1992 introduced Article 243-I, which mandates the establishment of a State Finance Commission.

• Similarly, Article 243-Y, also inserted by the same amendment, makes provisions for the constitution of a Finance Commission for Panchayats and Municipalities.

Composition and Appointment:

• The Governor of the state constitutes the State Finance Commission.

• The exact number of members is not specified in the Constitution, but it typically includes a Chairman and up to four other members. The statement that it consists of up to three members including the Chairman is a common understanding but the Governor has the discretion.

• Members can be appointed on a part-time basis.

• The qualifications and method of selection of members are determined by the state legislature.

Functions and Powers:

• The primary role is to review the financial position of Panchayats and Municipalities and recommend measures for strengthening their financial resources.

• The Commission suggests the distribution of net proceeds of taxes, duties, tolls, and fees leviable by the state, which may be divided between the state and the local bodies.

• It also recommends grants-in-aid to local bodies from the Consolidated Fund of the state.

• Powers of a Civil Court: While not explicitly stated in the Constitution, the State Finance Commission is generally vested with the power to summon witnesses and requisition public records to carry out its functions effectively. This is often prescribed in the respective State Finance Commission Acts.

Reporting Structure:

• The State Finance Commission submits its report to the Governor of the state, not the President of India.

• The Governor then lays the report, along with an explanatory memorandum of action taken, before the state legislature.

Significance:

• These commissions play a crucial role in ensuring the financial autonomy and decentralization of power to the grassroots level.

• Their recommendations are vital for the efficient functioning and development of local self-governing institutions.