Question

Which of the following statements are correct about the historical and current Finance Commissions?

i. The First Central Finance Commission was chaired by K.C. Neogy.

ii. The Second Central Finance Commission was chaired by K. Santhanam.

iii. The 16th Central Finance Commission is chaired by Dr. Arvind Panagariya.

iv. The 7th State Finance Commission of Kerala was chaired by Sri. P.M. Abraham.

v. The Finance Commission is appointed every three years.

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

Answer 1

Answer:

A. i, ii, and iii only

Finance Commissions in India

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

• Its primary role is to advise the President on the distribution of financial resources between the Union and the States, and among the States themselves.

• It also recommends principles governing grants-in-aid to States and measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities.

Key Facts about Finance Commissions:

• First Finance Commission: Chaired by K.C. Neogy. It submitted its report in 1952.

• Second Finance Commission: Chaired by K. Santhanam. It submitted its report in 1957.

• Sixteenth Finance Commission: Currently, the 16th Finance Commission is headed by Dr. Arvind Panagariya. It was constituted in November 2023.

• State Finance Commissions: Constituted under Article 243-I and 243-Y of the Constitution for recommending devolution of funds to Panchayats and Municipalities at the State level.

• Frequency: The Finance Commission is typically constituted every five years. It is not appointed every three years.

Why other options are incorrect:

• Statement iv is incorrect because the 7th State Finance Commission of Kerala was chaired by Sri. B.A. Prakash, not Sri. P.M. Abraham.

• Statement v is incorrect because Finance Commissions are constituted every five years, not three years.