State Finance Commission

Current Context : Recently, Kerala government constituted the 7th State Finance Commission, with a two-year tenure.

• The Commission, chaired by former Planning Board member K N Harilal, will comprise the Principal Secretary of Local Self-Government Department and the Additional Chief Secretary of Finance Department as members.

ABOUT STATE FINANCE COMMISSION (SFC)

• Article 243Iwas introduced by the 73rd Constitutional Amendment Act, 1992.
• It empowers the Governorof a state to constitute a Finance Commission every five years.

FUNCTIONS AND RESPONSIBILITIES

• It reviews the financial position of the Panchayats and recommends principles for governing.
• Distribution between state and panchayats of net proceeds of state taxes.
• Determination of taxes, duties, tolls and fees which may be assigned to Panchayats Grants-in-aid to Panchayats from State Consolidated Fund.
• Similar provisions are made under Article 243Yfor Municipalities.
• Ensures that a Finance Commission also assesses and recommends financial principles for municipalities.