Question

Which of the following statements are correct about the composition and qualifications of the Central Finance Commission?

i. The Finance Commission consists of a chairman and four other members appointed by the President.

ii. The chairman must have specialized knowledge of economics.

iii. One member must have wide experience in financial matters and administration.

iv. The qualifications of members are determined by the State Government.

v. Members are eligible for reappointment.

• A. i, iii, and v only
• B. i, ii, and iii only
• C. ii, iii, and iv only
• D. i, iii, iv, and v only

Answer 1

Answer:

A. i, iii, and v only

Central Finance Commission

• The Finance Commission is a constitutional body established under Article 280 of the Constitution of India.

• Composition: It consists of a Chairman and four other members.

• Appointment: All members, including the Chairman, are appointed by the President of India.

• Qualifications for Chairman: The Chairman should be someone who is, or has been, or is qualified to be appointed as a Judge of the High Court. This implies significant legal and administrative acumen.

• Qualifications for Members: Parliament has the power to determine the qualifications of the members. The qualifications are laid down by the Finance Commission (Miscellaneous Provisions) Act, 1951.

  • One member should be a person with wide experience in financial matters and administration.

  • Another member should have special knowledge of economics or public finance.

  • Two members should have experience in business or commerce, or public administration.

• Eligibility for Reappointment: Members of the Finance Commission are eligible for reappointment.

• Role: The Finance Commission recommends the distribution of net proceeds of taxes between the Union and the States, and among the States themselves. It also suggests principles governing grants-in-aid to States.