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Question 52 of 60 · Constitutional & Statutory Bodies
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In terms of its legal status, the Finance Commission of India is a:

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Answer: Option C — Constitutional body

Detailed Solution

The Finance Commission is a constitutional body, because it is provided for directly by Article 280 of the Constitution.

Article 280:

  • The President shall, within two years from the commencement of the Constitution and thereafter at the expiration of every fifth year or earlier, constitute a Finance Commission.
  • It shall consist of a Chairman and four other members appointed by the President.
  • Parliament may by law determine the qualifications of members and the manner of their selection.

Functions under Article 280(3):

  • Distribution of the net proceeds of taxes between the Union and the states, and allocation among the states of their shares.
  • Principles governing grants-in-aid to the states out of the Consolidated Fund of India.
  • Measures needed to augment the Consolidated Fund of a state to supplement the resources of panchayats and municipalities, on the basis of State Finance Commission recommendations (added by the 73rd and 74th Amendments).
  • Any other matter referred by the President in the interests of sound finance.

Report:

  • The Commission submits its report to the President, who lays it before both Houses of Parliament along with an explanatory memorandum on the action taken.
  • Its recommendations are advisory and not binding, but the government usually accepts the main recommendations on tax sharing.

Difference between constitutional and statutory bodies:

  • A constitutional body is created by the Constitution itself, such as the Election Commission, the UPSC, the CAG and the Finance Commission.
  • A statutory body is created by an Act of Parliament, such as the National Human Rights Commission and the Central Vigilance Commission.
  • An executive body is created by a government resolution, such as NITI Aayog.

Article 270 and Article 275:

  • Article 270 deals with the sharing of central taxes with states.
  • Article 275 deals with grants-in-aid from the Centre to states.

State Finance Commissions:

Under Articles 243I and 243Y, states set up their own Finance Commissions every five years for local bodies.

Why not the other options?

  • ✗It is not created by an Act of Parliament or by a Cabinet resolution.
  • ✗It is not a non-governmental body.

Quick tip

Remember: Finance Commission = constitutional body (Article 280); Chairman + 4 members; every 5 years.

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Constitutional & Statutory Bodies — Preparation

This question tests your understanding of Constitutional & Statutory Bodies, a key topic in the General Knowledge section. The detailed solution above uses a step-by-step approach to show the reasoning, and where available, a shortcut that helps you solve similar questions in under 90 seconds during the actual exam.

This topic covers bodies set up under the Constitution, such as the Election Commission, UPSC, Finance Commission, Comptroller and Auditor General and the national commissions for Scheduled Castes and Scheduled Tribes, and statutory or executive bodies such as NITI Aayog, the NHRC, the CVC, the CBI and Lokpal. Questions often ask whether a body is constitutional or not, which article creates it, who appoints its head and for how long. For example, the CAG is appointed under Article 148, the Finance Commission under Article 280, and NITI Aayog replaced the Planning Commission in 2015 by an executive resolution. Practise the constitutional and statutory bodies questions below, written in the style of the general awareness sections of exams such as SSC, banking, railways, CUET GAT, MAH CET and CLAT. Each question comes with a detailed explanation that adds related facts, so every question helps you revise more than one point.

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