Economics • Indian EconomyMedium
Consider the constitutional provisions regarding the Finance Commission of India under Article 280. Which of the following functions falls within its statutory mandate?
A. Auditing annual accounts of public sector undertakings and government ministries
B. Recommending the distribution of net tax proceeds between the Union and the states✓ Correct Answer
C. Formulating monetary policy and setting policy repo rates for commercial banks
D. Directing foreign trade policy and negotiating bilateral tariff agreements
💡 Solution & Explanation
Article 280 of the Constitution of India provides for the establishment of a Finance Commission every five years to recommend the principles governing the vertical and horizontal distribution of tax revenues between the Union government and the states, as well as grants-in-aid. Auditing is conducted by the Comptroller and Auditor General under Article 148, whereas monetary policy is managed by the Monetary Policy Committee. The Commission evaluates fiscal data from all states to ensure equitable resource allocation.
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