Finance commission and Committees

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Finance commission & Committees

The Finance Commission was established in 1951 by Dr. B.R. Ambedkar. The first Finance Commission was established by the President of India in 1951 under Article 280 of the Indian Constitution. It was formed to define the financial relations between the central government of India and the individual state governments.

History:

As a federal nation, India suffers from both vertical and horizontal fiscal imbalances.

  • Vertical imbalances between the central and state governments result from states incurring expenditures disproportionate to their sources of revenue, in the process of fulfilling their responsibilities.
  • Horizontal imbalances among state governments result from differing historical backgrounds or resource endowments, and can widen over time.

Finance commissionYear of establishmentChairmanOperational duration
First1951K. C. Neogy1952–57
Second1956K. Santhanam1957–62
Third1960A. K. Chanda1962–66
Fourth1964P. V. Rajamannar1966–69
Fifth1968Mahaveer Tyagi1969–74
Sixth1972K. Brahmananda Reddy1974–79
Seventh1977J. M. Shelat1979–84
Eighth1983Y. B. Chavan1984–89
Ninth1987N. K. P. Salve1989–95
Tenth1992K. C. Pant1995–2000
Eleventh1998A. M. Khusro2000–2005
Twelfth2002C. Rangarajan2005–2010
Thirteenth2007Dr. Vijay L. Kelkar2010–2015
Fourteenth 2013Dr. Y. V Reddy2015–2020
Fifteenth 2017N. K. Singh2020–2025

14th Finance Commission:

  1. The share of states in the net proceeds of the shareable Central taxes should be 42%. This is 10 percentage 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 needs 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.

15th Finance Commission:

  • The Fifteenth Finance Commission was constituted bythe Government of India, after the approval from the President of India, through a notification in the Gazette of India in November 2017.
  •  Nand Kishore Singh was appointed as the commission’s chairman, with its full-time members being Shaktikanta Das and Anoop Singh and its part-time members being Ramesh Chand and Ashok Lahiri.
  • The commission was set up to give recommendations for five years commencing on 1 April 2020.
  • The main tasks of the commission were to“strengthen cooperative federalism, improve the quality of public spending and help protect fiscal stability”

List of committees of the Indian government in after independence:

CommitteeAppointed inSubmitted report inSummary
Shah Nawaz Committee19551956The three-member committee was formed by the Nehru-government to address the public demand to investigate the disappearance of Subhas Chandra Bose. The committee was led by Shah Nawaz Khan, and included Suresh Chandra Bose, brother of Subhas, and S. N. Maitra.[4]
Balwant Rai Mehta Committee19571957Examine the working of the Community Development Programme and the National Extension Service
Ashok Mehta Committee19771978In December 1977, the Janata Government appointed a committee on Panchayati Raj institutions under the chairmanship of Ashoka Mehta.
Narasimham Committee on Banking Sector Reforms (1998)19981998
Sachar Committee20052006Examine social, economic and educational condition of the Muslim community of India
Srikrishna committee on Telangana20102010
Naresh Chandra Committee2012Defense reforms

Banking & Finance Committees

Finance Committees:

Monitoring your organization’s systems for budgeting, record keeping, financial reporting and safeguarding assets is generally more than a volunteer Treasurer or full-time Executive Director can do or should do by him or herself.  A Finance Committee can also provide valuable links between your organization’s Board of Directors, the staff and the external auditor.

Financial Standing Committees:

The role of the finance committee is primarily to provide financial oversight for the organization. There are three important Standing Committees dealing with financial affairs.

  1. Public Accounts Committee: It examines various expenditure reports and accounts under the purview of the Parliament.
  2. Estimates Committee: It analyses the expenditure and revenue estimates of various departments. It may suggest alternative policies.
  3. Committee on Public Undertakings: It analyses the accounts, and workings of the public sector firms.

Budgeting and Financial Planning

  1. Develop an annual operating budget with staff.
  2. Approve the budget within the finance committee.
  3. Monitor adherence to the budget.
  4. Set long-range financial goals along with funding strategies to achieve them.
  5. Develop multi-year operating budgets that integrate strategic plan objectives and initiatives.
  6. Present all financial goals and proposals to the board of directors for approval.

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