Finance Commision of India | Central Government Act Article 280

Basic Function of Finance Commision of India is to define financial relations between Center and State Government. I came in existence in 1951. It is also called Finance commision act 1951. FCI is defined in Article 280 of Central Government Act of Indian Constitution. It's basic function to change the economic condition of the country with it's innovative rules and ideas. It also can be seen as Vertical and Horizontal Balances in Indian States. General Factors of Horizontal Imbalance is historical backgrounds, differences in resource endowments. Article 269, 270, 275, 282 and 293 are similar to this that states the specific ways to sharing resources between union and state governments.

Recently Dr. Y. V. Reddy (Former RBI Governor) constituted 14th Finance Commission under his chairmanship.

Article 280 | Finance Commision of India

History:

Finance Commission	Year of Establishment	Chairman	Operational Duration
First	1951	K. C. Neogy	1952–57
Second	1956	K. Santhanam	1957–62
Third	1960	A. K. Chanda	1962–66
Fourth	1964	P. V. Rajamannar	1966–69
Fifth	1968	Mahaveer Tyagi	1969–74
Sixth	1972	K. Brahmananda Reddy	1974–79
Seventh	1977	J. M. Shelat	1979–84
Eighth	1983	Y. B. Chavan	1984–89
Ninth	1987	N. K. P. Salve	1989–95
Tenth	1992	K. C. Pant	1995–2000
Eleventh	1998	A. M. Khusro	2000–2005
Twelfth	2002	C. Rangarajan	2005–2010
Thirteenth	2007	Dr. Vijay L. Kelkar	2010–2015
Fourteenth	2013	Dr. Y. V Reddy	2015–2020

Highlights of 14th Commision

1.The share of states in the net proceeds of the shareable Central taxes should be 42%.This is 10%points higher than the recommendation of 13th Finance Commission.

2.Revenue deficit to be progressively reduced and eliminated.

3.Fiscal deficit to be reduced to 3% of the GDP by 2017–18.

4.A target of 62% of GDP for the combined debt of centre and states.

5.The Medium Term Fiscal Plan(MTFP)should be reformed and made the statement of commitment rather than a statement of intent.

6.FRBM Act need to be amended to mention the nature of shocks which shall require targets relaxation.

7.Both centre and states should conclude 'Grand Bargain' to implement the model Goods and Services Act(GST).

8.Initiatives to reduce the number of Central Sponsored Schemes(CSS)and to restore the predominance of formula based plan grants.

9.States need to address the problem of losses in the power sector in time bound manner.