Article 280 provides for a Finance Commission to be constituted by the president every 5th year or earlier as he considers necessary. It is a quasi – judicial body. Constitution envisages FC as the balancing wheel of Fiscal Federalism in India .


    • • A Chairman and 4 other members appointed by President . they hold office for a period specified by President . They are eligible for reappointment .

    • • Parliament to determine their qualifications & manner of selection. Accordingly, parliament enacted Finance Commission Act, 1951 describing their qualifications :
      1. Chairman: person having experience in public affairs Other members should be persons having .

      2. Special Knowledge of finance & accounts of government .

      3. Special Knowledge of economics .

      4. Wide experience in financial matters & administration .

      5. Judge of High Court or one qualified to be appointed so .


    FC makes recommendations to the President on the following matters (Art 280) :

    1. Distribution of net proceeds of taxes to be shared between the Centre & states, and between the states.

    2. Principles which should govern the grants – in – aid to the states by the Centre .

    3. Measures needed to augment the Consolidated fund of a State to supplement the resources of the Panchayats & municipalities on the basis of recommendations made by the state Finance Commission. (added by 73rd and 74th Amendments) .

    4. Any other matter referred to it by the president in the interests of sound finance..

    5. Grants to be given to Assam , Bihar , Orissa & West Bengal in Lieu of share in the net proceeds of export duty on jute & products (this function discontinued in 1960) .

    FC submits its report to the president , who lays it before both the houses of parliament along with an explanatory memorandum as to the action taken (Art 281).


    Name Year TReporto Chairman
    1st 1951 1953 Neogy
    2nd 1956 1957 Santhanam
    3rd 1960 1962 Ashok Chanda
    4th 1964 1965 Rajanmannar
    5th 1968 1969 Mahavir Tyagi
    6th 1972 1973 Brahmananda Reddy
    7th 1977 1977 Shelat
    8th 1982 1984 Chavan
    9th 1987 1989 Salve
    10th 1992 1994 Pant
    11th 1998 2000 Khusro
    12th 2002 2004 C. Rangarajan
    13th 2007 -- Vijay Kelkar