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UPSC Mains Previous Year Question With Answer Lecture 12 – UPSC Mains Paper Writing- Free PDF

Q.) How have the recommendations of the 14th Finance Commission of India enabled the states to improve their fiscal position? (150 Words) (10 marks)

Q.) भारत के 14वें वित्त आयोग की संस्तुतियों ने राज्यों को अपनी राजकोषीय स्थिति में सुधार करने में कैसे सक्षम किया है? (उत्तर 150 शब्दों में दीजिए?

General Studies-I & 2: Governance, Constitution, Polity, Social Justice and International relations.

What is the Finance Commission?

  • The Finance Commission is constituted by the President under article 280 of the Constitution, mainly to give its recommendations on distribution of tax revenues between the Union and the States and amongst the States themselves.
  • Two distinctive features of the Commission’s work involve redressing the vertical imbalances between the taxation powers and expenditure responsibilities of the centre and the States respectively and equalization of all public services across the States.

Who appoints the Finance Commission and what are the qualifications for Members?

  • The Finance Commission is appointed by the President under Article 280 of the Constitution.
  • As per the provisions contained in the Finance Commission [Miscellaneous Provisions] Act, 1951 and The Finance Commission (Salaries & Allowances) Rules, 1951, the Chairman of the Commission is selected from among persons who have had experience in public affairs, and the four other members are selected from among persons who:
  • are, or have been, or are qualified to be appointed as Judges of a High Court; or
  • have special knowledge of the finances and accounts of Government; or
  • have had wide experience in financial matters and in administration; or
  • have special knowledge of economics
  • The Finance Commission, a constitutional body, is formed every five years to give suggestions on centre-state financial relations.
  • Recommendations of 14th Finance Commission for the states
  • Increase in states’ share
  • Tax devolution be primary route of transfer of resources
  • Division of grants-in-aid to states
  • De-linking of centrally sponsored schemes

Recommendations have helped states to improve their fiscal position by:

  • Improvement in quality of fiscal deficit
  • Revenue autonomy to states
  • Reduction in centre’s control over fiscal powers of states
  • Increase in central transfers
  • Finance Commission acted as an agency to bring about co-ordination and co-operation.


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