Measures Need to be Taken for State Finance Commission
To strengthen the State Finance Commission, various measures need to be taken. The 6th report of the 2nd ARC also states some steps. These are
- The states should periodically constitute State Finance Commission, in line with Constitutional requirements.
- To support cooperative federalism and deepen participatory democracy, the SFCs must be strengthened urgently.
- Implementation of recommendations of SFCs by the state government must be ensured.
- State Finance Commissions should not just be composed of bureaucrats, but also include members of intellectual civil society and professors.
- It is crucial to acknowledge the functions of SFCs and it should not be seen as inferior when compared to the Central Finance Commission.
- The majority of states should recognize the significance of this institution in terms of its ability to further the democratic decentralization process.
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.