Finance Commission

The Finance Commission of India was formed on 22nd November, 1951. It was established under Article 280 of the Constitution of India. It is constituted by the President of India every fifth year or at such earlier time as he considers necessary. It provides recommendations for distribution of tax revenues between the Union and the State governments.

Mr Nand Kishore Singh is the current chairman of the Fifteenth Finance Commission. The Government of India on 27th November 2017 formed the Fifteenth Finance Commission after the approval from the President of India. The other members of the Commission are Shri Shaktikanta Das, Dr. Anoop Singh, Dr. Ashok Lahiri and Dr. Ramesh Chand. The new Commission will make recommendations for a period of five years commencing on 01st April 2020. 

The Fourteenth Finance Commission was set up on 02nd January 2013 headed by Dr. Y. V. Reddy. Its recommendations period covers from 01st April 2015 to 31st March 2020.

Composition and Qualifications of members

The Finance Commission consists of one chairman and four other members. They are appointed by the President of India. The chairman should be a person who have had experience in public affairs and the four other members are selected from among persons who

  1. are, or have been a judge of High Court, or qualified to be appointed as one.
  2. have special knowledge of Government finances or accounts.
  3. have wide experience in administration and financial matters.
  4. have special knowledge of economics.

Functions of Finance Commission:

The finance Commission makes the following recommendation to the President of India –

  • The distribution between the Centre and the States of the net proceeds of taxes which are to be, or may be, divided between them 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;
  • The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Municipalities and the Panchayats in the State on the basis of the recommendations made by the Finance Commission of the State.
  • On any other matter referred to it by the President in the interests of sound finance.


A member of the Commission or Chairman shall be disqualified for being a member if:

  1. he/she is of unsound mind,
  2. he/she is an undischarged insolvent (bankrupt),
  3. he/she has been convicted of an offence involving moral behaviour,
  4. he/she has financial and other interest which is likely to affect the smooth functioning of the Commission.

External links:

The Hindu – All you need to know about Finance Commission

ImportantIndia – Importance and role of Finance Commission In India

The Economic Times – What is the role of Finance Commission?


Finance Commission

  1. Article _______ of the Indian Constitution provides for the establishment of the Finance Commission of India.
    a) 280
    b) 256
    c) 210
    d) 270
  2. The first Finance Commission was constituted in –
    a) 1950
    b) 1951
    c) 1947
    d) 1961
  3. The Finance Commission is constituted after every –
    a) 4 years
    b) 5 years
    c) 6 years
    d) 10 years
  4. The _______ appoints the Finance Commission of India.
    a) Finance Minister
    b) President
    c) Governor of Reserve Bank of India
    d) Prime Minister
  5. Name the first chairman of the Finance Commission of India.
Query Box