Consider the constitutional status and structural mandate of the Finance Commission of India constituted under Article 280. Which of the following functions does it perform?

💡 Solution & Explanation

The Finance Commission is a constitutional body constituted by the President of India every five years under Article 280 to recommend the vertical devolution of tax revenues between the central government and state governments, as well as horizontal distribution among individual states. It also suggests measures needed to augment state consolidated funds to supplement resources of local panchayats and municipalities based on recommendations of state finance commissions. The report submitted by the commission along with an explanatory memorandum is laid before each House of Parliament. Dr. B.R. Ambedkar emphasized the vital federal stabilizing role of this financial institution.