Finance Commission

---

The Finance Commission is a quasi judicial body, constituted by the president of India under the provisions of the constitution of India. 

Key Highlights

• It is a constitutional body.
• It is constituted by the President of India every fifth year. Hence, it is not a permanent body.
• Chairman of the 16th Finance Commission- Dr. Arvind Panagariya

 

Primacy Functions of the Finance Commission

• It is a crucial pillar of fiscal federalism, ensuring equitable distribution of financial resources between the union and the state governments. 
• It makes recommendations regarding the distribution of financial resources between the union government and state governments. 
• The commission submits its report to the president. However, the recommendations made by the commission are only advisory in nature and not binding on the government. 

 

Constitutional Provisions Related to the Finance Commission.

• Article 280- Finance Commission 
• Article 281- Recommendations of the Finance Commission

 

Composition of the Finance Commission

• It consists of a chairman and four other members. All the members are appointed by the president. 
• The chairman and other members of the commission are eligible for reappointment.