The Finance Commission of India came into existence in 1951.
It was established under Article 280 of the Indian Constitution by the President of India. It was formed to define the financial relations between the centre and the state.
The Finance Commission Act of 1951 states the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.
As per the Constitution, the commission is appointed every five years and consists of a chairman and four other members. Since the institution of the first finance commission, stark changes have occurred in the Indian economy causing changes in the macroeconomic scenario.
The Finance Commission of India has a Chairman along with four other members and a Secretary.
Functions of Finance Commission
The distribution between the Union and the States of the net proceeds of taxes and the allocation between the States of the respective shares of such proceeds.
The principles which should govern the grants in aid of the revenues of the States out of the Consolidated Fund of India.
Any other matter referred to the Commission by the President in the interests of sound finance.
