Functions of the State Finance Commission
State Finance Commission’s functions are comparable to that of the Central Finance Commission, which, in accordance with Article 280 of the Indian Constitution, is appointed by the President of India and is in charge of allocating central revenues to the Union and state governments. The functions of the State Finance Commission are:
- A State Finance Commission examines the financial position of the panchayats and municipal organizations in a state and offers recommendations to the Governor.
- It gives suggestions to the Governor regarding the policies that should control how taxes, tariffs, levies, and toll fees collected by the state are divided between the state and its Panchayati Raj Institutions at all levels.
- To implement numerous measures to enhance the financial conditions of various local authorities and Panchayati Raj Institutions.
- To serve as a liaison for financial matters between the Union and State governments for local bodies.
- The Grant-in-Aid to Local Bodies from the consolidated fund of the state.
- Utilising the funds that the state government receives from the Union government.
- Disbursement of funds from the State’s consolidated fund to various municipal organizations and Panchayati Raj Institutions of the state.
- Measures for the overall advancement of Panchayat’s finances.
State Finance Commission
The State Finance Commission (SFC) is a Constitutional body, formed under the 73rd and 74th Constitutional Amendment Act, 1992. It recommends the transfer of funds from the State Government to the Panchayati Raj Institutions and provides suggestions for augmenting their resources. Municipalities and city councils are also brought under the purview of the State Finance Commission as per Article 243-Y.