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{{short description|Agency in India}}
{{About|finance commissions of India in general|the most recent finance commission|Fifteenth Finance Commission of India}}

{{Use Indian English|date=January 2018}}
{{Use dmy dates|date=July 2022}}
{{Infobox government agency
| agency_name = Finance Commission
| nativename =
| nativename_r = Vitta Āyoga
| type = Commission
| logo =
| logo_width =
| logo_caption =
| seal =
| seal_width =
| seal_caption =
| image = Emblem of India.svg
| image_size = 150px
| image_caption = Emblem of India
| formed = {{Start date and age|df=yes|1951|11|22}}
| preceding1 =
| preceding2 =
| dissolved =
| superseding =
| jurisdiction = {{flagicon|IND}} [[Government of India]]
| headquarters = New Delhi
| employees =
| budget =
| minister1_name =
| minister1_pfo =
| minister2_name =
| minister2_pfo =
| chief1_name = [[N. K. Singh]], [[Indian Administrative Service|IAS]]
| chief1_position = (Chairman)
| chief2_name = [[Ajay Narayan Jha]], [[Indian Administrative Service|IAS]]
| chief2_position = (Member)
| chief3_name = [[Prof.]] Anoop Singh
| chief3_position = (Member)
| chief4_name = [[Ashok Lahiri]]
| chief4_position = (full time Member)
| chief5_name = [[Prof.]] [[Ramesh Chand (economist)|Ramesh Chand]]
| chief5_position = (part time Member)
| chief6_name = Arvind Mehta, [[Indian Administrative Service|IAS]]
| chief6_position = (Secretary)
| chief7_name =
| chief7_position =
| chief8_name =
| parent_agency =
| child1_agency =
| child2_agency =
| website = {{URL|fincomindia.nic.in}}
| footnotes =
| chief8_position =
| chief9_name =
| chief9_position =
| parent_department =
}}

[[File:Fincom.jpg|thumb|386x386px|Fincom India]]
The '''Finance Commissions''' ([[International Alphabet of Sanskrit Transliteration|IAST]]: ''Vitta Āyoga'') are commissions periodically constituted by the [[President of India]] under ''Article 280'' of the [[Indian Constitution]] to define the financial relations between the [[Government of India|central government of India]] and the [[State governments of India|individual state governments]]. The [[First Finance Commission|First Commission]] was established in 1951 under The Finance Commission (Miscellaneous Provisions) Act, 1951. Fifteen Finance Commissions have been constituted since the promulgation of Indian Constitution in 1950. Individual commissions operate under the terms of reference which are different for every commission, and they define the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.<ref>{{cite web |url= http://lawmin.nic.in/ld/P-ACT/1951/A1951-33.pdf/|title= The Finance (Miscellaneous Provisions) Act, 1951|access-date=24 November 2017}}</ref> As per the constitution, the commission is appointed every five years and consists of a chairman and four other members.

The [[Fifteenth Finance Commission|most recent]] Finance Commission was constituted in 2017 and is chaired by [[N. K. Singh|N. K.Singh]], a former member of the [[Planning Commission (India)|Planning Commission]].<ref name=":02"/><ref name=":12"/><ref name=":22"/><ref name=":32"/>

==History==
As a federal nation, India suffers from both vertical and horizontal [[fiscal imbalance]]s. Vertical imbalances between the central and state governments result from states incurring expenditures disproportionate to their sources of [[revenue]], in the process of fulfilling their responsibilities. However, states are better able to gauge the needs and concerns of their inhabitants and therefore more efficient at addressing them. Horizontal imbalances among state governments result from differing historical backgrounds or resource endowments and can widen over time.

Several provisions to bridge the fiscal gap between the centre and the states were already enshrined in the [[Constitution of India]], including Article 268, which facilitates the levy of duties by the centre but equips the States to collect and retain the same. Similarly, Articles 269, 270, 275, 282 and 293, among others, specify ways and means of sharing resources between the Union and States. In addition to the above provisions, the finance commission serves as an institutional framework to facilitate Centre-State Transfers. {{citation needed|date=July 2017}}

'''Article 280 of the Indian Constitution defines the scope of the commission:'''

# The President will constitute a finance commission within two years from the commencement of the Constitution and thereafter at the end of every fifth year or earlier, as deemed necessary by him/her, which shall '''include a chairman and four other members.'''
# Parliament may by law determine the requisite qualifications for appointment as members of the commission and the procedure of selection.
# The commission is constituted to make recommendations to the president about the distribution of the net proceeds of taxes between the Union and States and also the allocation of the same among the States themselves. It is also under the ambit of the finance commission to define the financial relations between the Union and the States. They also deal with the devolution of unplanned revenue resources.

==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.

==The Finance Commission (Miscellaneous Provisions) Act, 1951==

The Finance Commission (Miscellaneous Provisions) Act, 1951 was passed to give a structured format to the finance commission and to bring it to par with world standards, by laying down rules for the qualification and disqualification of members of the commission, and for their appointment, term, eligibility and powers.<ref>{{cite act |title = The Finance Commission (Miscellaneous Provisions) Act |number=33 |date=1951 |url = http://lawmin.nic.in/ld/P-ACT/1951/A1951-33.pdf |access-date =2017-07-22}}</ref>

=== Qualifications of the 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 [[List of high courts in India|high court]],
# Have knowledge of [[Government of India|government]] finances or accounts, or
# Have had experience in administration and financial expertise; or
# Have special knowledge of [[economics]]

=== Disqualification from being a member of the commission ===
A member may be disqualified if:
# He is mentally unsound; and as follows-
# 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.

=== Terms of office of members and eligibility for reappointment ===
Every member will be in office for the time period as specified in the order of the President, but is eligible for reappointment provided he has, by means of a letter addressed to the president, resigned his office.

=== Salaries and allowances of the members ===
The members of the commission shall provide full-time or part-time service to the commission, as the President specifies in his order. The members shall be paid salaries and allowances as per the provisions made by the [[Government of India|Central Government]].

== List of Finance Commissions ==
So far 15 Finance Commissions have been appointed which are as follows:<ref>{{cite web |url=http://gangothri.org/?q=node/80 |title=Reports of the Finance Commissions of India |access-date=2014-07-10}}</ref>

{| class="wikitable"
|-
! Finance Commission
! Year of establishment
! Chairman
! Operational duration
|-
| [[First Finance Commission|First]]
| 1951
| [[K. C. Neogy]]
| 1952–57
|-
| [[Second Finance Commission|Second]]
| 1956
| [[K. Santhanam]]
| 1957–62
|-
| [[Third Finance Commission|Third]]
| 1960
| A. K. Chanda
| 1962–66
|-
| [[Fourth Finance Commission|Fourth]]
| 1964
| [[P. V. Rajamannar]]
| 1966–69
|-
| [[Fifth Finance Commission|Fifth]]
| 1968
| Mahaveer Tyagi
| 1969–74
|-
| [[Sixth Finance Commission|Sixth]]
| 1972
| [[K. Brahmananda Reddy]]
| 1974–79
|-
| [[Seventh Finance Commission|Seventh]]
| 1977
| J. M. Shelat
| 1979–84
|-
| [[Eighth Finance Commission|Eighth]]
| 1983
| [[Y. B. Chavan]]
| 1984–89
|-
| [[Ninth Finance Commission|Ninth]]
| 1987
|[[N. K. P. Salve]]
| 1989–95
|-
| [[Tenth Finance Commission|Tenth]]
| 1992
| [[K. C. Pant]]
| 1995–00
|-
| [[Eleventh Finance Commission|Eleventh]]
| 1998
| [[A. M. Khusro]]
| 2000–05
|-
| [[Twelfth Finance Commission|Twelfth]]
| 2002
| [[C. Rangarajan]]
| 2005–10
|-
| [[Thirteenth Finance Commission|Thirteenth]]
| 2007
| [[Vijay Kelkar|Dr. Vijay L. Kelkar]]
| 2010–15
|-
| [[Fourteenth Finance Commission|Fourteenth]]<ref>{{cite web |url=http://www.pib.nic.in/newsite/erelease.aspx?relid=91309 |title=Terms of Reference of the Fourteenth Finance Commission |access-date=2014-07-10}}</ref>
| 2013
| [[Y. Venugopal Reddy|Dr. Y. V Reddy]]
| 2015–20
|-
| [[Fifteenth Finance Commission|Fifteenth]]<ref>{{cite web |url=http://pib.nic.in/newsite/PrintRelease.aspx?relid=173905 |title=Terms of Reference of the Fifteenth Finance Commission |access-date=2017-06-12}}</ref>
| 2017
| [[N. K. Singh]]
| 2020–25
|-

|}

=== 14th Finance Commission ===
{{main|Fourteenth Finance Commission of India}}
Major Recommendations of 14th Finance Commission headed by Prof. Y V Reddy

# The share of states in the net proceeds of the shareable Central taxes should be 42%. This is 10 percentage points higher than the recommendation of 13th Finance Commission.
# Revenue deficit to be progressively reduced and eliminated.
# Fiscal deficit to be reduced to 3% of the GDP by 2017–18.
# A target of 62% of GDP for the combined debt of centre and states.
# The Medium Term Fiscal Plan (MTFP) should be reformed and made the statement of commitment rather than a statement of intent.
# FRBM Act needs to be amended to mention the nature of shocks which shall require targets relaxation.
# Both centre and states should conclude 'Grand Bargain' to implement the model [[Goods and Services Tax (India)|Goods and Services Act]] (GST).
# Initiatives to reduce the number of Central Sponsored Schemes (CSS) and to restore the predominance of formula-based plan grants.
# States need to address the problem of losses in the power sector in time bound manner.

=== 15th Finance Commission ===
{{Main|Fifteenth Finance Commission of India}}
The Fifteenth Finance Commission was constituted by the [[Government of India]], after the approval from the [[President of India]], through a notification in the [[The Gazette of India|Gazette of India]] in November 2017.<ref name=":42">{{Cite web|url=http://www.egazette.nic.in/WriteReadData/2017/180483.pdf|title=S.O. 3755(E).—The following order made by the President is to be published for general information:— ORDER|date=27 November 2017|website=[[The Gazette of India]]|publisher=Department of Economic Affairs, [[Government of India]]|publication-place=[[New Delhi]]|access-date=20 January 2018}}</ref><ref name=":52">{{Cite web|url=http://pib.nic.in/newsite/PrintRelease.aspx?relid=173905|title=Constitution of Fifteenth Finance Commission Notified|date=27 November 2018|website=[[Press Information Bureau of India]]|access-date=20 January 2018}}</ref> [[N. K. Singh|Nand Kishore Singh]] was appointed as the commission's chairman, with its full-time members being [[Shaktikanta Das]] and Anoop Singh and its part-time members being Ramesh Chand and Ashok Lahiri.<ref name=":02">{{Cite web|url=http://www.business-standard.com/article/news-ians/n-k-singh-heads-15th-finance-commission-shaktikanta-das-a-member-117112701199_1.html|title=N.K. Singh heads 15th Finance Commission, Shaktikanta Das a member|date=27 November 2017|website=[[Business Standard]]|publication-place=[[New Delhi]]|access-date=15 January 2018}}</ref><ref name=":12">{{Cite web|url=http://www.thehindubusinessline.com/economy/nk-singh-appointed-chairman-of-15th-finance-commission/article9974029.ece|title=NK Singh appointed Chairman of 15th Finance Commission|date=27 November 2017|newspaper=[[The Hindu]] Business Line|publication-place=[[New Delhi]]|access-date=15 January 2018}}</ref><ref name=":22">{{Cite web|url=http://www.livemint.com/Politics/rWfJyCZBIkttQMKHXoZBHO/NK-Singh-appointed-chairman-of-15th-Finance-Commission.html|title=N.K. Singh appointed chairman of 15th Finance Commission|date=27 November 2017|website=Livemint|publisher=[[HT Media Ltd]]|publication-place=[[New Delhi]]|access-date=15 January 2018}}</ref><ref name=":32">{{Cite web|url=https://www.ndtv.com/india-news/former-planning-commission-member-nk-singh-appointed-15th-finance-commission-chairman-1780855|title=Former Planning Commission Member NK Singh Appointed 15th Finance Commission Chairman|date=28 November 2017|website=[[NDTV]]|publication-place=[[New Delhi]]|access-date=15 January 2018}}</ref> However [[Ajay Narayan Jha]] was appointed replacing Shaktikanta Das who resigned from the commission to serve as the governor of the [[Reserve Bank of India|Reserve Bank of India.]]

The commission was set up to give recommendations for five years commencing on 1 April 2020.<ref name=":42" /><ref name=":52" /> The main tasks of the commission were to "strengthen cooperative federalism, improve the quality of public spending and help protect fiscal stability".<ref>{{Cite web|url=http://www.livemint.com/Opinion/dJjupDFPzHDGW4nSNi3vDO/The-tasks-for-the-15th-Finance-Commission.html|title=The tasks for the 15th Finance Commission|date=6 December 2017|website=Livemint|publisher=[[HT Media Ltd]]|access-date=20 January 2018}}</ref><ref>{{Cite news|url=http://www.business-standard.com/article/opinion/agenda-for-15th-finance-commission-117103001448_1.html|title=Agenda for 15th Finance Commission|last=Chandrasekhar|first=K. M.|date=30 October 2017|work=[[Business Standard]]|access-date=26 March 2018|oclc=496280002|url-access=subscription }}</ref> Some newspapers like ''[[The Hindu]]'' and ''[[The Economic Times]]'' noted that commission's job was harder because of the rollout of [[Goods and Services Tax (India)|goods and service tax]] (GST), as, it had taken certain powers related to taxation away from states and the Union and had given it to the GST Council.<ref>{{Cite news|url=http://www.thehindu.com/opinion/editorial/new-india-formula/article21268622.ece|title=New India formula? – on the 15th Finance Commission|date=6 December 2017|work=[[The Hindu]]|access-date=26 March 2018|agency=Editorial|issn=0971-751X|oclc=13119119}}</ref><ref>{{Cite news|url=https://economictimes.indiatimes.com/news/economy/policy/the-challenges-before-15th-finance-commission-are-many/articleshow/62366288.cms|title=The challenges before 15th Finance Commission are many|last=Srinivas|first=V.|date=4 January 2018|work=[[The Economic Times]]|access-date=26 March 2018|agency=[[Indo-Asian News Service]]|oclc=61311680}}</ref>

==See also==
* [[Part One of the Constitution of India]]
* [[Fiscal Responsibility and Budget Management Act, 2003]]

== References ==
{{Reflist}}

==External links==
* [https://web.archive.org/web/20140909230437/http://lawmin.nic.in/coi/coiason29july08.pdf Full text of the Constitution of India] (as of July 2008)
* [http://fincomindia.nic.in Homepage of the Finance Commission]

{{Ministry of Finance (India)}}
{{Indian commissions}}
{{Finance Commission of India}}



[[Category:Indian commissions and inquiries]]
[[Category:Government finances in India]]
[[Category:Finance in India]]
[[Category:Finance Commission of India]]

Finance Commission - Revision history

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