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Finance Commission to consider Bihar's demand
Why in the news ?
- Finance Commission Chairman N K Singh said it would "sympathetically" consider the issue of regional inequality in the eastern region and the demand for increased share of central funds to Bihar.
More in the news
- A team of the 15th Finance Commission, led by Singh, is on a three-day visit to Bihar.
- The Finance Commission chief, however, did not make any comment on the call for according special category status to Bihar.
- Talking about centrally sponsored schemes, Singh questioned the relevance of a high number of such programmes.
- However, it remains to be seen whether all these schemes are required, they are serving their purpose, and also if the money allotted is necessary, he said.
- The chairman also pitched for devolution of more funds from the commission to “backward” States like Bihar, which has “performed well with limited resources”.
Finance Commission
- The Finance Commission is a constitutional body created by the President of India under Article 280 of the Constitution, 1950.
- Its main purpose is to keep a check on the vertical and horizontal imbalances of the federal finance of India.
- Vertical imbalances refer to the imbalance between the revenue generated by the Centre and states and their expenditure needs.
- Horizontal imbalances refer to the failure of states to provide the comparable services due to their incapability to raise the necessary funds.
- It is usually constituted once in five years.
- The first Finance Commission was established in 1951. Till date, 14 Finance Commissions have been created.
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.
Source
The Hindu.