{"id":21145,"date":"2024-01-04T10:02:21","date_gmt":"2024-01-04T10:02:21","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=21145"},"modified":"2024-01-29T06:35:22","modified_gmt":"2024-01-29T06:35:22","slug":"how-is-the-finance-commission-of-india-constituted-what-do-you-know-about-the-terms-of-reference-of-the-recently-constituted-finance-commission-discuss-15-marks-250-words","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/how-is-the-finance-commission-of-india-constituted-what-do-you-know-about-the-terms-of-reference-of-the-recently-constituted-finance-commission-discuss-15-marks-250-words\/","title":{"rendered":"How is the Finance Commission of India constituted? What do you know about the terms of reference of the recently constituted Finance Commission? Discuss. (15 marks, 250 words)"},"content":{"rendered":"<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-gs-advance-and-mentorship-program-ampcsat?utm_source=Blog&amp;utm_medium=Link&amp;utm_campaign=GS+Advanced\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1280\" height=\"300\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8.png\" alt=\"\" class=\"wp-image-43397\" srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/07\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-8-585x137.png 585w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/a><\/figure><\/div>\n\n\n<p>The Finance Commission of India, a constitutional body, plays a pivotal role in the fiscal federalism of the country by recommending the distribution of financial resources between the Union and the States. Constituted every five years, its composition and terms of reference are crucial aspects that shape the economic landscape of the nation. The Commission comprises a Chairman and four other members, each possessing a deep understanding of finance, economics, or public administration. The President of India appoints the members, and their tenure is generally aligned with the planning cycle. The constitutional mandate directs the Commission to assess the revenue position of both the Union and the States, consider factors affecting the distribution of resources, and recommend principles for sharing taxes and grants-in-aid.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><strong>Tag: Appointment to various Constitutional posts, powers, functions, and responsibilities of various Constitutional Bodies.<\/strong>&nbsp;&nbsp;<\/p><\/blockquote>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-6a80532d21f68\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a80532d21f68\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/how-is-the-finance-commission-of-india-constituted-what-do-you-know-about-the-terms-of-reference-of-the-recently-constituted-finance-commission-discuss-15-marks-250-words\/#Decoding_the_Question\" >Decoding the Question:&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/edukemy.com\/blog\/how-is-the-finance-commission-of-india-constituted-what-do-you-know-about-the-terms-of-reference-of-the-recently-constituted-finance-commission-discuss-15-marks-250-words\/#Answer\" >Answer:&nbsp;&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/edukemy.com\/blog\/how-is-the-finance-commission-of-india-constituted-what-do-you-know-about-the-terms-of-reference-of-the-recently-constituted-finance-commission-discuss-15-marks-250-words\/#Composition_of_Finance_Commission\" >Composition of Finance Commission:&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/edukemy.com\/blog\/how-is-the-finance-commission-of-india-constituted-what-do-you-know-about-the-terms-of-reference-of-the-recently-constituted-finance-commission-discuss-15-marks-250-words\/#Terms_of_Reference_of_15th_FC\" >Terms of Reference of 15th FC:&nbsp;&nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/edukemy.com\/blog\/how-is-the-finance-commission-of-india-constituted-what-do-you-know-about-the-terms-of-reference-of-the-recently-constituted-finance-commission-discuss-15-marks-250-words\/#In_case_you_still_have_your_doubts_contact_us_on_9811333901\" >In case you still have your doubts, contact us on 9811333901.&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/edukemy.com\/blog\/how-is-the-finance-commission-of-india-constituted-what-do-you-know-about-the-terms-of-reference-of-the-recently-constituted-finance-commission-discuss-15-marks-250-words\/#Visit_our_YouTube_Channel_%E2%80%93_here\" >Visit our YouTube Channel &#8211;&nbsp;here<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Decoding_the_Question\"><\/span><strong>Decoding the Question:<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>In the Introduction, try to briefly write about the Finance Commission (FC) and how it is constituted.<\/strong>\u00a0\u00a0<\/li><li><strong>In Body,<\/strong>\u00a0\u00a0<\/li><li><strong>Briefly write about the 15th Finance Commission and discuss its terms of reference.<\/strong>\u00a0\u00a0<\/li><li><strong>In Conclusion, try to write about the overall importance of the Finance Commission.<\/strong>\u00a0\u00a0<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Answer\"><\/span><strong>Answer:<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <strong>Finance Commission is a Constitutionally mandated quasi-judicial body that is at the center of fiscal federalism.<\/strong> Article 280 of the Constitution of India provides for a Finance Commission (FC) consisting of a chairperson and four other members. They are appointed by the President, every 5th year or at such an earlier time as he considers necessary.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" width=\"1280\" height=\"300\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/10.png\" alt=\"\" class=\"wp-image-42412 lazyload\" data-srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/10.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/10-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/10-585x137.png 585w\" data-sizes=\"(max-width: 1280px) 100vw, 1280px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1280px; --smush-placeholder-aspect-ratio: 1280\/300;\" \/><\/a><figcaption><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Link&amp;utm_campaign=Essay\">UPSC Essay Course<\/a><\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Composition_of_Finance_Commission\"><\/span>Composition of Finance Commission:&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>The Finance Commission consists of a chairman and four other members to be appointed by the President.&nbsp;&nbsp;<\/li><li>They are eligible for reappointment and hold office for such a period as specified by the President in his order.&nbsp;&nbsp;<\/li><li>The Constitution authorizes the Parliament to determine the qualifications of members of the commission and the manner of selection.&nbsp;&nbsp;<\/li><li>The Parliament has specified the qualifications of the chairman and members of the commission. Its chairman should be a person having experience in public affairs, and the other members should be selected from amongst the following:&nbsp;&nbsp;<\/li><li>A judge of the High court or one qualified to be appointed as one.&nbsp;&nbsp;<\/li><li>A person who has specialized knowledge of finance and accounts of the government.&nbsp;&nbsp;<\/li><li>&nbsp;A person who has wide experience in financial matters and in administration.&nbsp;&nbsp;<\/li><li>A person who has special knowledge of economics.&nbsp;&nbsp;<\/li><\/ul>\n\n\n\n<p><strong>Fifteenth Finance Commission:<\/strong> The Fifteenth Finance Commission <strong>was constituted in 2017 under the chairmanship of N. K. Singh,<\/strong> against the backdrop of the abolition of the Planning Commission and the introduction of the goods and services tax (GST), which has fundamentally redefined federal fiscal relations. Its <strong>recommendations are applicable for five years from the year 2021-22 to 2025-26.<\/strong>&nbsp;&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Terms_of_Reference_of_15th_FC\"><\/span><strong>Terms of Reference of 15<\/strong><strong><sup>th<\/sup><\/strong><strong> FC:<\/strong>&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Use of Census 2011 for distribution of tax revenue between centre and states: <\/strong>Previously FCs were using 1971 Census, but using 2011 Census might lead to smaller share of revenue for some states, mainly Southern States, which have stabilized their population over the period.&nbsp;<\/li><li><strong>Progress made in promoting ease of doing business: <\/strong>This has raised concerns as this does not consider geographical limitations of a state.&nbsp;<\/li><li><strong>Control over expenditure on populist measures by states: <\/strong>This appears to challenge the decision-making ability of state government. What may appear to be a populist measure, can also be a necessity in a particular state.&nbsp;<\/li><li>Examine whether revenue deficit grants should be provided at all&nbsp;<\/li><li>Though in line with the Fiscal Responsibility and Budget Management Act, 2003, which recommends zero revenue deficit, it is important for states with persistent deficits.&nbsp;<\/li><li>The Commission shall <strong>use the population data of 2011<\/strong> while making its recommendations.&nbsp;&nbsp;<\/li><li>Progress made by states in sanitation, solid waste management and bringing in behavioral change to end open defecation.&nbsp;<\/li><li>Achievements of states in the implementation of flagship schemes of Government of India, disaster resilient infrastructure, sustainable development goals, and quality of expenditure.&nbsp;<\/li><\/ul>\n\n\n\n<p>&nbsp;As per the Constitution, the<strong> Finance Commission is a balancing wheel of fiscal federalism in India.<\/strong> It is one of the most important organs for unitary administration in India, working towards enhanced cooperative, competitive, and fiscal federalism. However, there are various concerns, such as<strong> decrease in the share of devolutions of the southern states<\/strong> from the central government, etc. which are required to be addressed for redressing the vertical imbalances between the taxation powers.&nbsp;&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/UPSC-Essay-Course-1280\u00d7300-1-3.svg\" alt=\"\" class=\"wp-image-42688 lazyload\" width=\"781\" height=\"182\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 781px; --smush-placeholder-aspect-ratio: 781\/182;\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_case_you_still_have_your_doubts_contact_us_on_9811333901\"><\/span><strong>In case you still have your doubts, contact us on 9811333901.<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p>For Daily Updates and Study Material:<\/p>\n\n\n\n<p>Join our Telegram Channel &#8211;&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>1. Learn through Videos &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3vOD8sU\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><li>2. Be Exam Ready by Practicing Daily MCQs &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3Q9z2nF\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><li>3. Daily Newsletter &#8211; Get all your Current Affairs Covered &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3bE2y5J\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><li>4. Mains Answer Writing Practice &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3mZuVxl\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Visit_our_YouTube_Channel_%E2%80%93_here\"><\/span>Visit our YouTube Channel &#8211;&nbsp;<a href=\"https:\/\/www.youtube.com\/@ShabbirsEduKemyforIAS\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>The Finance Commission of India, a constitutional body, plays a pivotal role in the fiscal federalism of the country by recommending the distribution of financial resources between the Union and the States<\/p>\n","protected":false},"author":17,"featured_media":21146,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":"","_members_access_role":[],"_members_access_error":""},"categories":[1500],"tags":[1253,176,142,232,145,140],"class_list":["post-21145","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-upsc-mains-solved-paper-gs-2","tag-finance-commission-of-india","tag-general-studies-2","tag-previous_year_questions","tag-upsc","tag-upsc-mains-question-paper","tag-upsc_preparation_strategy"],"aioseo_notices":[],"aioseo_head":"\n\t\t<!-- All in One SEO 4.9.9 - aioseo.com -->\n\t<meta name=\"description\" content=\"The Finance Commission of India, a constitutional body, plays a pivotal role in the fiscal federalism of the country by recommending the distribution of financial resources between the Union and the States\" \/>\n\t<meta name=\"robots\" content=\"max-image-preview:large\" \/>\n\t<meta name=\"author\" content=\"Edukemy Team\"\/>\n\t<link rel=\"canonical\" href=\"https:\/\/edukemy.com\/blog\/how-is-the-finance-commission-of-india-constituted-what-do-you-know-about-the-terms-of-reference-of-the-recently-constituted-finance-commission-discuss-15-marks-250-words\/\" \/>\n\t<meta name=\"generator\" content=\"All in One SEO (AIOSEO) 4.9.9\" \/>\n\t\t<meta property=\"og:locale\" content=\"en_US\" \/>\n\t\t<meta property=\"og:site_name\" content=\"Blog - Edukemy&#039;s Blog for aspirants\" \/>\n\t\t<meta property=\"og:type\" content=\"article\" \/>\n\t\t<meta property=\"og:title\" content=\"How is the Finance Commission of India constituted? 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