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With reference to the Finance Commission of India, consider the following statements: 1. The Finance Commission is a statutory body. 2. The Finance Commission was set up under Article 280 of the Constitution. 3. The recommendations made by the Finance Commission are only advisory in nature. 4. The first Finance Commission was set up in 1950. Which of the above statements are correct?

With reference to the Finance Commission of India, consider the following statements: 1. The Finance Commission is a statutory body. 2. The Finance Commission was set up under Article 280 of the Constitution. 3. The recommendations made by the Finance Commission are only advisory in nature. 4. The first Finance Commission was set up in 1950. Which of the above statements are correct? Correct Answer 2 and 3 only

The correct answer is 2 and 3 only.

Key Points

  • The President of India constitutes the Finance Commission every 5 years. 
  • The finance commission is a constitutional body mandated by article 280 of the constitution. Hence, Statement 1 is incorrect and 2 is correct.
  • The recommendations made by the Finance Commission are of an advisory nature only and therefore, not binding upon the government. Hence statement 3 is correct.
  • It submits its report to the President of India.
  • The first Finance Commission was constituted in 1951.
  • The eligibility of members of the Finance Commission is determined by the Parliament of India. Hence, Statement 1 is incorrect.
  • Chairman of the Finance Commission submits his report to the President of India. Hence, Statement 4 is incorrect.
  • Composition: Chairman and 4 members. 
  • ​They make recommendations on
    • net proceeds distribution between union and state.
    • grant-in-aid from CFI (Consolidated Fund of India).
    • Principles and measures needed for augmentation of CFS (Consolidated Fund of State).
    • Resources to panchayats and municipalities.
    • Any other matter referred to the commission by President in the interest of sound finance.
  • Procedure and powers are defined by parliament law.

Important Points

  • Current Finance Commission: 15th
  • Chairperson: Nand Kishore Singh

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