Question

Consider the following statements about Finance Commision :

1. It recommends 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.
2. It recommends the principles that should govern the grants-in-aid to the states by the Centre (i.e., out of the consolidated fund of India).
3. The recommendations made by the Finance Commission are only of advisory nature and hence, not binding on the government.

Which of the above statements is/ are correct ?

• A. a) 1 only
  
• B. b) 2 and 3 only
  
• C. c) 1 and 3 only
  
• D. d) All of the above
  

Answer 1

The correct option is D d) All of the above


Answer : D
The recommendations made by the Finance Commission are only of advisory nature and hence, not binding on the government. It is up to the Union government to implement its recommendations on granting money to the states.

To put it in other words, ‘It is nowhere laid down in the Constitution that the recommendations of the commission shall be binding upon the Government of India or that it would give rise to a legal right in favour of the beneficiary states to receive the money recommended to be offered to them by the Commission’ .