Economics • Indian EconomyEasy
What is the primary mandate of the 'Finance Commission of India' constituted under Article 280 of the Constitution?
A. To audit the annual accounts of public sector undertakings and ministries.
B. To recommend the principles governing the distribution of tax revenues between the Union and the States, and among the States inter se.✓ Correct Answer
C. To formulate annual monetary policy targets for inflation control.
D. To regulate foreign institutional investments and monitor capital market violations.
💡 Solution & Explanation
The Finance Commission is established under Article 280 of the Constitution primarily to recommend the distribution of net tax proceeds between the Centre and the States, as well as allocations among the states. Alternative choices incorrectly attribute auditing powers, which fall under the Comptroller and Auditor General, or monetary policy duties managed by the Reserve Bank of India. Constitutional bodies and their specific articles are staple topics in Indian polity and economics papers.
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