A finance commission is set
up every five years by the President under Article
280 of the Constitution. Finance Commission of India came into existence in 1951.It was formed to
define the financial relations between
the centre and the state. These recommendations cover a period of five years.
The commission also lays down rules by which the centre should provide grants-in-aid to states out of the
Consolidated Fund of India. It is also
required to suggest measures to augment the resources of states and ways to
supplement the resources of panchayats and municipalities.
The Fourteenth Finance Commission has been set up under the Chairmanship of Dr.Y.V.Reddy
[Former Governor Reserve Bank of India].
Other Members of the Commission are:
- Ms. SushmaNath [Former Union Finance Secretary],
- Dr.M.Govinda Rao [Director, National Institute for Public Finance and Policy, New Delhi].
- Dr.SudiptoMundle, Former Acting Chairman, National Statistical Commission.
- Prof Abhijit Sen (Member, Planning Commission) is the part timeMember of the Fourteenth Finance.
- Commission. Shri Ajay Narayan Jha is the Secretary, Fourteenth Finance Commission.
- Are, or have been, or are qualified, as judges of High Court, or
- Have knowledge of Government finances or accounts, or
- Have had experience in administration and financial expertise;
- Have special knowledge of economics
The Commission has the power determine their own procedure and:
- Has all powers of the civil court as per the Court of Civil Procedure, 1908.
- Can summon and enforce the attendance of any witness or ask any person to deliver information or produce a document, which it deems relevant.
- Can ask for the production of any public record or document from any court or office.
- Shall be deemed to be a civil court for purposes of Sections 480 and 482 of the Code of Criminal Procedure, 1898.
Tenure of the 14th Finance Commission:
by 31st October, 2014.Its recommendations will cover the five year period
1st April, 2015.
- It includes the centre to share 42% of the divisible pool of tax to the states which is 10% more than the present share.
- It recommended doing away with the distinction between unconditional and conditional transfers.
- Previously the transfers were a mix of conditional and unconditional funds, where the conditional transfers is given for serving some specific purpose. Here the state having the flexibility to utilize the conditional transfers as per the needs.
- The commission, on deciding the share of states has done away with the component of previous commission namely, fiscal discipline. Instead it introduced two new components that are changes in population between 1971 and 2011 and giving credit to the success in retaining forest cover.
- The commission along with recommended on implementation of Goods and Services Tax and laid out a fiscal road map for the economy.