Finance Commission Meaning and Current Finance Commission

The Finance Commission is a constitutional body in India that is responsible for recommending the distribution of financial resources between the central government and the state governments. The recommendations made by the Finance Commission help to ensure that there is an equitable distribution of resources across the country.

The current Finance Commission is the 15th Finance Commission, which was constituted by the President of India in November 2017 and will serve until October 2022. The chairman of the 15th Finance Commission is N.K. Singh, a former member of parliament and former civil servant. The other members of the commission are Shaktikanta Das, Anoop Singh, Ashok Lahiri, and Ramesh Chand. The 15th Finance Commission’s mandate includes making recommendations on the distribution of tax revenues between the central and state governments, the principles governing the grants-in-aid for local bodies, and any other matter referred to it by the President in the interests of sound finance.

The Finance Commission has the following objectives:

• To recommend the distribution of taxes between the central and state governments: One of the primary objectives of the Finance Commission is to recommend the distribution of taxes between the central and state governments. The commission considers various factors such as the population, income, area, and fiscal capacity of each state while making its recommendations.
• To recommend the principles for distributing grants-in-aid to states: The Finance Commission also recommends the principles for distributing grants-in-aid to states. These grants are given to states for specific purposes, such as promoting education or infrastructure development.
• To ensure fiscal stability: The Finance Commission also has the objective of ensuring fiscal stability in the country. This is done by recommending measures to enhance the revenue resources of the government and to reduce the revenue deficits of the state governments.
• To promote cooperative federalism: The Finance Commission aims to promote cooperative federalism by encouraging the central and state governments to work together in the interests of the country as a whole.
• To promote social and economic development: The Finance Commission also seeks to promote social and economic development in the country by making recommendations that help to ensure that financial resources are distributed equitably across the country. This can help to reduce regional disparities and promote inclusive growth.

Achievements:

• Industrial growth: The Five Year Plans played a key role in accelerating the pace of industrialization in India. The share of manufacturing in the national income increased from 9% in 1950 to 18% in 1965.
• Agricultural development: The Five Year Plans also focused on improving agricultural productivity by increasing the use of modern technology, irrigation facilities, and fertilizers. This led to an increase in food production and helped in achieving food self-sufficiency.
• Infrastructure development: The Five Year Plans emphasized the need for developing infrastructure in the country, such as roads, railways, ports, and airports. This helped in improving connectivity and facilitating economic growth.
• Human resource development: The Five Year Plans also aimed at improving the standard of living of the people by providing better education, healthcare, and housing facilities.

Failures:

• Implementation challenges: The success of the Five Year Plans was hindered by poor implementation due to corruption, bureaucratic inefficiencies, and lack of accountability.
• Regional imbalances: The Five Year Plans failed to address regional imbalances in the country, with some states and regions continuing to lag behind others in terms of economic growth and development.
• Dependence on foreign aid: The Five Year Plans relied heavily on foreign aid and loans, which led to a high external debt burden for the country.
• Inadequate employment generation: The Five Year Plans did not focus enough on generating employment opportunities, leading to high levels of unemployment and underemployment.
• Neglect of small-scale industries: The Five Year Plans gave more importance to large-scale industries and neglected the development of small-scale industries, which were crucial for providing employment opportunities to a large section of the population.