Finance Commission ensures equitable distribution of funds between Centre and States from "summary" of Indian Polity by J.C. Johari
The Finance Commission plays a crucial role in ensuring a fair and balanced distribution of financial resources between the Centre and the States in India. This is essential for maintaining the stability and efficiency of the fiscal system of the country. The Commission is a constitutional body that is appointed every five years to review the financial situation of the government and make recommendations on the distribution of funds. One of the primary functions of the Finance Commission is to recommend the distribution of tax revenues between the Centre and the States. This is done based on various factors such as population, area, and infrastructure requirements of the States. By considering these factors, the Commission aims to ensure that each State receives an appropriate share of the financial resources available. Another important aspect of the Finance Commission's work is to recommend grants-in-aid to the States. These grants are provided by the Centre to assist the States in meeting their expenditure requirements. The Commission carefully assesses the financial needs of each State and makes recommendations on the amount and nature of grants that should be provided. Furthermore, the Finance Commission also plays a role in promoting fiscal discipline among the States. By recommending measures to improve the financial management of the States, the Commission helps in ensuring the overall stability of the fiscal system. This is crucial for maintaining the economic growth and development of the country.- The Finance Commission's efforts are aimed at ensuring a fair and equitable distribution of funds between the Centre and the States. By carefully considering various factors and making recommendations based on the financial needs of each State, the Commission plays a vital role in maintaining the financial stability and efficiency of the country's fiscal system.
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