Question

Which of the following statements is/are correct about the Central Finance Commission?

i. The Finance Commission is constituted under Article 280 of the Constitution of India as a quasi-judicial body.

ii. The President of India appoints the chairman and four members, who are not eligible for reappointment.

iii. The recommendations of the Finance Commission are binding on the Government of India.

• A. i only
• B. i and ii only
• C. ii and iii only
• D. None of the above

Answer 1

Answer:

A. i only

Central Finance Commission:

• Constitutional Basis: The Finance Commission is a constitutional body established under Article 280 of the Constitution of India. This means it is explicitly mentioned and empowered by the Constitution, making it a significant institution.

• Quasi-Judicial Nature: It functions as a quasi-judicial body. This implies it has powers akin to a court, such as summoning witnesses and compelling the production of evidence, though it is not a full-fledged court.

• Appointment of Members: The Chairman and four other members are appointed by the President of India. The Constitution specifies that members should be persons of ability and experience in finance, accounting, public affairs, and administration.

• Eligibility for Reappointment: Unlike some other constitutional appointments, the Constitution does not explicitly bar members of the Finance Commission from reappointment. This means they can be reappointed if the President deems fit.

• Role and Recommendations: The primary role of the Finance Commission is to make recommendations on the distribution of net proceeds of taxes between the Union and the States, the allocation of the same between the States, and measures to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities.

• Binding Nature of Recommendations: The recommendations of the Finance Commission are advisory in nature and are not binding on the government. The government (both Union and State) considers these recommendations and decides on their implementation. While not binding, they carry significant weight and are usually accepted.

• Frequency of Formation: The Finance Commission is constituted normally every five years or at such earlier intervals as the President considers necessary. This ensures regular review and adjustment of fiscal federal relations.