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Current Affairs

Government extends tenure of Finance commission

Date: 28 November 2019 Tags: Constitution

Issue

The Union cabinet extended the tenure of the 15th Finance Commission by a year to October 30, 2020. The term of the commission was originally set to end in October, but was first extended by a month to November 30.

 

Background

The extension was given on the grounds of the change in the stature of Jammu & Kashmir. Besides, there were delays on account of the model code of conduct of the elections.

 

Details

  • The commission is headed by former expenditure secretary and Planning Commission member N.K. Singh.

  • The cabinet decision means the Commission will recommend its award to six fiscal years, instead of the usual five.

  • Making a five-year coverage available for the commission beyond April 2021, will help both state and central governments design schemes with medium- to long-term financial perspective and provide adequate time for mid-course evaluation and correction.

Finance Commission

Article 280 of the Constitution states that the President shall constitute a Finance Commission at the expiration of every fifth year or at such earlier time as the President considers necessary. It is a constitutional body.

 

Functions

  • Distribution of net proceeds of taxes between Center and the States, to be divided as per their respective contributions to the taxes.

  • Determine factors governing Grants-in-Aid to the states and the magnitude of the same.

  • To make recommendations to the president as to the measures needed to augment the Fund of a State to supplement the resources of the panchayats and municipalities in the state on the basis of the recommendations made by the finance commission of the state.

  • Any other matter related to it by the president in the interest of sound finance.

Membership and criteria

  • As per the Constitution, the Commission is appointed every five years and consists of a chairman and four other members.

  • The Chairman of a finance commission is selected from people with experience of public affairs. The other four members are selected from people who:

  • Are, or have been, or are qualified, as judges of a high court,

  • Have knowledge of government finances or accounts, or

  • Have had experience in administration and financial expertise; or

  • Have special knowledge of economics

Powers

  • Has all powers of a civil court as per the Civil Procedure Code, 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.

Disqualification of members

  • He is mentally unsound;

  • He is an undischarged insolvent;

  • He has been convicted of an immoral offence;

  • His financial and other interests are such that it hinders the smooth functioning of the commission.