Foundation
Static background & why it matters
Overview
The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution. It is constituted by the President of India every five years (or earlier) to recommend the distribution of tax revenues between the Union and the States, and among the States themselves. It plays a pivotal role in India's fiscal federalism, ensuring equitable resource allocation and financial stability across the country.
The Finance Commission is a constitutional body (Article 280) central to India's fiscal federalism, making recommendations on revenue sharing and grants between the Centre and states. Its reports directly impact governance, public finance, and economic development, making it a mandatory topic for UPSC aspirants.
Key facts
Constitutional Article
Article 280
Nature of Body
Constitutional, Quasi-judicial
Appointed By
President of India
Frequency of Appointment
Every five years or earlier
First Finance Commission
1951 (Chairman: K.C. Neogy)