Question
Describe the composition of Finance Commission of States? What are its functions?
Solution
The state government are required to appoint a State Finance Commission every five years. The main function of the commission is to examine the financial position of the local governments and make recommendations for strengthening of their finance. It has to review the distribution of revenues between the State and local governments on the one land and between the rural and urban local governments on the other. The setting up of an Finance Commission makes the allocation of funds to the rural local government a political.
