SSC
Under Article 243-I, the State Finance Commission is constituted by the Governor every:
Answer (Detailed Solution Below)View answer ▾Hide ▴
Answer: Option D — Five years
Detailed Solution
Article 243-I of the Constitution, added by the 73rd Constitutional Amendment Act, 1992, requires the Governor of a state to constitute a State Finance Commission (SFC) within one year of the commencement of the 73rd Amendment, and thereafter at the expiry of every fifth year. Article 243Y applies the same provision to municipalities.
The purpose of the State Finance Commission is to strengthen the finances of local bodies, so that they can carry out the functions given to them. The SFC reviews the financial position of the Panchayats and municipalities and makes recommendations to the Governor on:
The principles governing the distribution between the state and the local bodies of the net proceeds of taxes, duties, tolls and fees leviable by the state, and their allocation among the different levels of Panchayats.
The determination of taxes, duties, tolls and fees that may be assigned to, or collected by, the Panchayats.
Grants-in-aid to the Panchayats from the Consolidated Fund of the State.
Measures needed to improve the financial position of the Panchayats.
The Governor places the recommendations of the Commission, along with an explanatory memorandum on the action taken, before the state legislature. The state legislature can decide the composition of the Commission and the qualifications of its members.
The State Finance Commission is similar in purpose to the Finance Commission at the national level (Article 280), which recommends how central taxes should be shared between the Centre and the states. In fact, Article 280(3) requires the Union Finance Commission to suggest measures to increase the Consolidated Fund of a State to supplement the resources of Panchayats and municipalities, on the basis of the recommendations of the State Finance Commission.
In practice, many states have been slow to set up their SFCs on time or to act on their recommendations, which has weakened the finances of local bodies. The 15th Finance Commission recommended large grants for local bodies and made timely constitution of SFCs a condition for receiving them.
Why not the other options?
- ✗Two, three and ten years are incorrect; the SFC is constituted every five years.
Quick tip
Remember: State Finance Commission = Article 243-I (Panchayats) and Article 243Y (municipalities), every 5 years by the Governor; Union Finance Commission = Article 280; State Election Commission = Article 243K.
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Panchayati Raj & Municipalities — Preparation
This question tests your understanding of Panchayati Raj & Municipalities, 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 local self-government in India: the Balwant Rai Mehta and Ashok Mehta committees, the 73rd Amendment on panchayats (Part IX and the Eleventh Schedule), the 74th Amendment on municipalities (Part IX-A and the Twelfth Schedule), and state election commissions and finance commissions. Questions commonly ask which state first adopted Panchayati Raj (Rajasthan, at Nagaur in 1959), which committee recommended the three-tier system, and what the 73rd and 74th Amendments provide, such as reservation for women of not less than one-third of seats. The Eleventh Schedule lists 29 subjects and the Twelfth lists 18. Practise the Panchayati Raj and municipalities 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.