Everything about Finance Commission

Finance Commission of India

  • It is set up every five years by the President under Article 280 of the Constitution.
  • It first came into existence in 1951.


  • It was formed to define the financial relations between the centre and the state.
  • These recommendations cover a period of five years.
  • The commission also lays down rules by which the centre should provide grants-in-aid to states out of the Consolidated Fund of India.
  • It is also required to suggest measures to augment the resources of states and ways to supplement the resources of panchayats and municipalities.

Qualification of members

  • The Chairman of the Finance Commission is selected among people who have had the experience of public affairs.
  • The other four members are selected from people who:
  1. Are or have been or are qualified, as judges of High Court
  2. Have knowledge of Government finances or accounts
  3. Have had experience in administration and financial expertise
  4. Have special knowledge of economics.

Powers of the commission

  • The Commission can determine its own procedure.
  • It has all powers of the civil court as per the Court of Civil Procedure, 1908.
  • It can summon and enforce the attendance of any witness or ask any person to deliver information or produce a document, which it deems relevant.
  • It can ask for the production of any public record or document from any court or office.
  • It shall be deemed to be a civil court for purposes of Sections 480 and 482 of the Code of Criminal Procedure, 1898.