Learning about finance basics is one of the most important skills in this generation. Everyone wants financial freedom and early retirement in India. Therefore, they are all learning the basics of finance.
These include the process of managing your money and how to generate your funds. It also teaches investing, banking, assets, and liabilities, and many more. Which are all essential to your overall financial health. But as an Indian, it is important to understand the finance commission of India.
What is the finance commission?
The finance commission of India is a constitutional body established over 50 years ago on Indian soil. It was formed under Article 280 of the Indian Constitution and functions as a quasi-judicial body. The commission is set up by the President under Article 280 of the Constitution.
The President of India will first submit the finance commission report before each House of Parliament. With a note explaining the measures taken by the government before recommending the finance commission. The finance commission helps determine the processes and formulas crucial for sharing taxes levied by the Union Government.
The finance commission also decides the division of resources between the state government and the Panchayat institutions at all levels. According to the Indian Constitution, each state finance commission is appointed by the Governor every five years. The Governor also appoints the other four members for the commission. These five finance commissions have been constituted from time to time since the year 2000.
Constitution of the financial commission
The finance commission of India is composed of the chairman and four other members appointed by the president of India. The five members are also subjected to reappointment on requirements according to the law of India. The parliament under the Indian constitution determines the qualification and disqualification.
They also determine the manner in which they should be appointed. The finance commission chairman must have experience in Public Affairs. The other four members must also be selected among judges qualified to be appointed as the High Court Judges.
The role of a finance commission
The role of a finance commission of India according to Article 280 Clause 3 include the following:
- Recommending the distribution of the net proceeds of the taxes shared or allocated between the Union Government and the States. Along with the inter-state distribution of the respective shares of such proceeds;
- Responsible for recommending the Principal that should govern the Grants-in-aid of the revenues to the States and Union Territory out of the consolidated fund of India.
- Recommends the measures needed to augment the consolidated fund of a state based on the State Finance Commissions recommendation. This helps facilitate the supply of required resources to the panchayat and Municipalities in the State. It also avoids obstacles in their functioning.
- The finance commission considers from time to time any matter that refers to them by the President in the interest of “Sound Finance”.They also submit a report to the President after delivering the necessary functions allotted to them. This report is further presented before the Houses of Parliament by the President. With a memorandum explaining the actions taken by the commission to fulfill their functions.
What is a quasi-judicial?
A quasi-judicial body is a non-judicial body. They are contract or private law entities that possess powers and procedures like a court of law or judge. These include the arbitrator panel, tribunal board, public administrative agency, and many more. They are required by law to determine facts and draw conclusions, providing the basis of official action. Their powers are limited to specific areas of expertise and authority, Example of quasi-judicial includes National Human Rights Commission, National Commission for Women, National Commission for Minorities, and many more.
Why finance commission is quasi-judicial
The finance commission is a quasi-judicial body that has the Powers of the Civil Code according to The Code of Civil Procedure, 1908. They summon and enforce attendance, demand documents, and requisition any public record from any court of office. Their actions are able to rectify a situation or impose legal penalties. These may also affect the legal rights, duties, or privileges of specific parties. The finance commission also recommends advice relating to grants-in-aid to the Government. Here are why the finance commission is quasi-judicial:
- Cost-effective: Under the customary judicial process, a large section of the population cannot approach the courts. These defeat the purpose of justice. Quasi-judicial, on the other hand, is cost-effective, encouraging people to seek justice for their injustice.
- Simple process: Quasi-judicial does not have a lengthy or complex procedure when submitting applications, evidence, and others.
- Full of experts: Quasi-judicial consists of experts, who understand the technicalities of a case. They also take the necessary actions and consequences involved in any case.
- Reduce judiciary workload: Quasi-judicial takes up specific matters, reducing the massive workload of the Judiciary.
Bottom line To attain financial security you must understand your financial ratio. Also, India’s population is more than 138 crores therefore, it is important to take steps in decreasing the Judiciary burdens.