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15th Finance Commission

Published on Tuesday, December 05, 2017
15th Finance Commission

Recently, President of India appointed 15th Finance commission under the chairmanship of NK Singh.

What is Finance commission?

For every five years, president of India appoints Finance commission under Article 280 of the constitution.

  • It is a constitutional body.
  • The main function of finance commission is to define financial relations between centre and states.

Members of the commission:

The members of finance commission consist of Chairman and four other members. The chairman should be a person having experience in public affairs and the four other members should be selected from amongst the following:

  • A judge of high court or one qualified to be appointed as judge of high court.
  • A person who has specialised knowledge of finance and accounts of the government.
  • A person who has wide experience in financial matters and in administration.
  • A person who has wider knowledge in economics.

The members of the commission are:

  • NK Singh- Chairman
  • Shaktikanta Das- Former secretary of Economic affairs
  • Ashok Lahiri- Chairman of Bandhan bank
  • Anoop Singh- Professor
  • Ramesh Chand- NITI Aayog member
Along with constitutionally mandated functions, 15th Finance commission also perform following functions
  • To study impact of Goods and Service Tax on finances of both Union and states
  • To study payment of compensation for possible loss of revenues for 5 years.
  • It also considers proposing measurable performance-based incentives for states.
  • 15th Finance commission also recommends a fiscal consolidation roadmap for sound fiscal management

General Knowledge Questions and Answers

Finance commission so far:

  • First Finance Commission was set up 1951 under the Chairmanship of K C Neogy.
  • Till now 14th Finance commissions were appointed.
  • Recently 15th commission is appointed under the chairmanship of NK Singh.

Functions of the finance commission:

  • To recommend the distribution of the net proceeds of taxes to be shared between the Centre and the states, and the allocation between the states of the respective shares of such proceeds.
  • To recommend the principles that should govern the grants in aid from the centre to the state out of the Consolidated Fund of India.
  • The also recommends the measures to increase the resources of states and ways to distribute the resources of panchayats and municipalities.
  • Any other matter referred to it by the president.
The recommendations made by the Finance Commission are not binding on the government. Finance commission has only advisory role. In practice, the recommendations of Finance Commission are accepted by the Government of India for the distribution of shared tax revenue, as well as for grant in aid.

Parameters used by Finance commission:

Finance commission uses following parameters in giving recommendations
  • Population
  • Income distance
  • Fiscal discipline
  • Area
  • Infrastructure distance

The parameters used by 14th finance commission are:

Name of the Parameter Weightage given
Income distance 50%
Population 17.5%
Area 15%
Demographic change 10%
Forest cover 7.5%

15th finance commission:

  • Recently president of India constituted 15th Finance commission. The commission will make recommendations, by October 2019, for five years commencing April 1, 2020.
  • The period of 15th commission recommendations: 1st April 2020 to 31st March 2025.


Question 1.

Who is the Chairman of 15th Finance commission?
a. YV Reddy
b. Urjit Patel
c. NK Singh
d. Rajiv Mehrshi
Rajiv Mehrshi is present CAG
YV Reddy is 14th Finance commission chairman.
Urjit Patel is present RBI governor

Question 2.

Which of the following is constitutional body?
a. NITI Aayog
b. Planning commission
c. Finance commission
d. National Human Rights Commission

Question 3.

Which of the following article deals with Finance commission?
a. Article 148
b. Article 76
c. Article 280
d. Article 262
Article 76 deals with Attorney General
Article 148 deals with CAG
Article 262 deals with Inter-state council

Question 4.

15th Finance commission recommendations valid from
a. 2017-2022
b. 2015-2020
c. 2020-2025
d. 2021-2026
14th Finance commission recommendations applicable from 2015-2020

Question 5.

Finance commission recommendations are binding on the government
a. True
b. False

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