How is finance commission related with planning commission?

Answer 1

The Finance Commission of India came into existence in 1951. The Finance commission is established under article 280 of the Indian Constitution of India by the President of India. The Indian Finance Commission Act was passed to give a structured format to the Finance Commission of India as per the world standard. The need for the Finance Commission was felt by the British for guiding the finance of India. The structure of the modern Act was laid in the early 1920's. The Finance Commission is formed to define the financial relations between the centre and the state. The Finance Commission Act of 1951 tells about the qualification, appointment, term, eligibility, disqualification, powers etc of the Finance Commission.

Functions Of The Finance Commission

The Finance Commission's duty is to recommend to the President as to-

• The distribution of net proceeds of taxes between the Union and the States.
• To evaluate the increase in the Consolidated Fund of a state to affix the resources of the Panchayat in the state.
• To evaluate the increase in the Consolidated Fund of a state to affix the resources of the Municipalities in the state.

Implementation Of The Recommendation Of Finance Commission

The recommendation of the Finance Commission are implemented

• By an order of the President or by executive orders.

Powers of the Commission:

The Finance Commission has the following powers:

• The Commission shall have all the powers of the Civil Court as per the Code of Civil Procedure, 1908.
• It can call any witness, or can ask for the production of any public record or document from any court or office.
• It can ask any person to give information or document on matters as it may feel to be useful or relevant.
• It can function as a civil court in discharging its duties.

Qualifications for appointment and the manner of selection:

The Chairman of the Finance Commission is selected among persons who have had the experience of public affairs, and four other members are selected among persons who

• Are, or have been, or are qualified as judges of High Court, or
• Have knowledge of finance, or
• Have vast experience in financial matters and are in administration, or
• Have knowledge of economics

Term of Office of the members:

Every member of the commission shall be in the office as specified by the President. He can also be reappointed, provided that he has already addressed a letter to the President for his resignation.

Conditions of service and salaries and allowance of members:

• Each member should provide whole time or part time service to the Commission as the President with respect to each case might specify.
• Each member shall receive salaries according to the provisions made by the central government.

Disqualification:

A member may be disqualified if:

• He is of unsound mind.
• He is involved in a vile act.
• If his interests are likely to affect the smooth functioning of the Commission.

The Finance Commission is a constitutional body while the Planning Commission is not statutory and merely an advisory body.

The Planning Commission is an institution in the Government of India, which formulates India's Five-Year Plans, among other functions.

While some of their functions overlap, by and large the Finance Commission focuses on non-plan revenues (administrative costs of government etc) and expenditure while the Planning Commission focuses on plan expenditure (social schemes and infrastructure)

Answer 2

Planning commission and Finance Commission both deal with all the states,

the difference is dat while Planning commissions deals in each state's Planning issues of development

and request from the States,

the Financial Commission deals with the funds' allocation

To define the Relationship between Planning Commission and Finance Commission in the Indian context

is very difficult as both Planning Commission and Finance Commission play a vital role in their respective field,

the only difference being that planning commission does not enjoy constitutional status.

But still 70 percent of tax allocation is done by planning commission.

From the very beginning a question always arises that if we have a constitutional body called finance commission

then what is the need of planning commission. It is again a debatable topic and many opposition parties were totally against

the planning commission because it violates the principle of strict federalism.

Because of the planning commission the union government does not give much importance to finance commission.

In planning commission there is monarchy of prime minister and its council.

Even though the Planning Commission is an extra-constitutional body it enjoys almost parallel authority to the Cabinet.

Planning Commission makes five year plan but Finance commission decides how to allocate the funds