Subject: Polity
The Finance Commission is a constitutional body established under Article 280 of the Constitution of India. It is responsible for recommending the distribution of revenues between the Union and the States, as well as among the states themselves. The Commission is typically composed of a chairman and other members who are experts in economics and public finance.
In simple language, the Finance Commission plays a crucial role in ensuring that public funds are shared fairly across the country. Its recommendations cover important issues such as tax devolution, grants-in-aid, and fiscal management, which are essential for balanced regional development. For example, its reports help determine how much money each state receives, impacting local development projects and social services.
The Commission’s advisory role is central to resolving fiscal disparities and promoting economic stability. Regular debates in Parliament often reflect on its recommendations, and recent discussions have focused on improving revenue-sharing mechanisms to better support underdeveloped regions. This ensures that all states have the resources they need to implement effective governance.