Central Vigilance Commission

• Central Vigilance Commission is the main agency for preventing corruption in Central government.
• It was established in 1964 by an executive resolution of Central government but given Statutory Status in 2004
• Recommended by Santhanam Committee on Prevention of Corruption (1962–64).

Composition of Central Vigilance Commission

• Central Vigilance Commission is a multi-member body consisting of
  • Central Vigilance Commissioner (chairperson) and
  • Not more than two vigilance commissioners.

• They are appointed by the President by warrant  on the recommendation of a three-member committee consisting of  Prime Minister , Home Minister & Leader of Opposition in Lok Sabha.

• They hold office for a term of four years or until they attain the age of 65 years, whichever is earlier.
• After their tenure, they are not eligible for further employment under Central or a state government.

• Salary, allowances and other conditions of service of
  • Central Vigilance Commissioner = Chairman of UPSC
  • Vigilance Commissioner = member of UPSC.

But they cannot be varied to his disadvantage after his appointment.

• Central Vigilance Commission has its own Secretariat, Chief Technical Examiners (CTE) and a wing of Commissioners for Departmental Inquiries

Jurisdiction

• Members of All India Services  of the Union and Group A officers of the Central Government.
• Officers of the rank of Scale V and above in the Public Sector Banks.
• Managers and above in General Insurance Companies.
• Officers drawing salary of `8700/- p.m. and above on Central Government D.A. pattern

Working

• Central Vigilance Commission conducts its proceedings at its headquarters (New Delhi). It is vested with the power to regulate its own procedure.
• It has all the powers of a civil court and its proceedings have a judicial character.
• All ministries/departments in the Union Government have a Chief Vigilance Officer (CVO) who heads the Vigilance Division of the organisation ,  advising the Head of Office in  matters pertaining to vigilance. He is  a link between  organisation and  Central Vigilance Commission on one hand and his organisation and Central Bureau of Investigation on  other.
• The Central Vigilance Commission, on receipt of the report of the inquiry undertaken by any agency on a reference made by it, advises the Central government to further course of action.  Central government consider the advice of the Central Vigilance Commission and take appropriate action. However, where the Central government does not agree with the advice of the Central Vigilance Commission, it shall communicate the reasons (to be recorded in writing) to the Central Vigilance Commission.

The Central Vigilance Commission has to present annually to the President a report on its performance.  President places this report before each House of Parliament.

Central Information Commission

• Established  in 2005 under the provisions of  Right to Information Act (2005) (statutory body)

Functions

• It  is a high-powered independent body which inter alia looks into the complaints made to it and decide the appeals. It entertains complaints and appeals pertaining to offices, financial institutions, public sector undertakings, etc., under the Central Government and the Union Territories.

Composition

• It consists of
  • Chief Information Commissioner
  • Not more than ten Information Commissioners.
• Appointed by the President on the recommendation of a committee consisting of Prime Minister, Leader of Opposition &  a Union Cabinet Minister nominated by Prime Minister.

Qualification to become Chief Information Commissioner and Information Commisioners

• They
  • should be persons of eminence in public life with wide knowledge and experience in law, science and technology, social service, management, journalism, mass media or administration and governance.
  • should not be MP or MLA .
  • should not hold any other office of profit
  • Should not be connected with any political party or carry on any business or pursuing any profession.

Term

• Chief Information Commissioner and Information Commissioners  hold office for a
  • term of 5 years or
  • until they attain the age of 65 years, whichever is earlier.
• They are not eligible for reappointment
• Salaries and other benefits are equivalent to Chief Election Commissioner

State Information Commission

• Right to Information Act of 2005 provides for the creation of not only the Central Information Commission but also a State Information Commission at the state level. Accordingly, all the states have constituted the State Information Commissions through Official Gazette Notifications.
• State Information Commission is a high-powered independent body which interalia looks into the complaints made to it and decide the appeals. It entertains complaints and appeals pertaining to offices, financial institutions, public sector undertakings, etc., under the concerned state government.”
• The Commission consists of a State Chief Information Commissioner and not more than ten State Information Commissioners. They are appointed by the Governor on the recommendation of a committee consisting of the Chief Minister as Chairperson, Leader of Opposition in the Legislative Assembly and a State Cabinet Minister nominated by Chief Minister.
• They should be persons of eminence in public life with wide knowledge and experience in law, science and technology, social service, management, journalism, mass media or administration and governance.
• They should not be a Member of Parliament or Member of the Legislature of any State or Union Territory. They should not hold any other office of profit or connected with any political party or carrying on any business or pursuing any profession.”
• The State Chief Information Commissioner and a State Information Commissioner hold office for a term of 5 years or until they attain the age of 65 years, whichever is earlier. They are not eligible for reappointment.
• The Governor can remove the State Chief Information Commissioner or any State Information Commissioner from the office.

National Human Rights Commission

• National Human Rights Commission (NHRC) is the watchdog of human rights in India.
• It was established in 1993 under Protection of Human Rights Act,1993.
• It is a Statutory body (not constitutional).

Functions of NHRC

• Main purpose is, suo – moto or through petition of person , to investigate the violation of human rights or failure of state to prevent human rights violation
• Inspecting police lock-ups, prisons and juvenile homes where people are interred.
• Payment of compensation to the victim or to her/his family;
• Disciplinary proceedings against delinquent officials;
• It may also
  1. Conduct research about human rights
  2. Create awareness among people about human rights
  3. Encourage work of NGOs in this regard

Composition of NHRC

It consist of a Chairman and 4 members.

Chairman	Retired Chief Justice of India.
4 members	1. One Member who is, or has been, a Judge of the Supreme Court of India . 2. One Member who is, or has been, the Chief Justice of a High Court. 3. Two Members to be appointed from among persons having knowledge of, or practical experience in, matters relating to human rights.

Apart from above  full time members + 4 ex officio members and those are chairmen of

National commission for SC	National commission for women
National commission for ST	National commission for minorities

Term of Office

• Chairman and members hold office for 5 yrs or till they attain age of 70.
• Member or chairman can be removed if he is adjudged an  insolvent,engages in any paid employment,infirmity of mind,unsound mind so declared by court .
• Salaries and conditions determined by Central government but cant be reduced.

Why was it established ?

The establishment of NHRC  in 1993 resulted from the culmination of a number of national and international factors.

• Internal conflicts in Punjab, Jammu & Kashmir and  North – Eastern states escalated in the 1980s and early 1990s and were dealt with by the government with a heavy hand.
• Media, civil society organisations and general public increasingly expressed concern about police and security forces’ actions in tackling insurgency and the culture of impunity within the government – basic human rights were being ignored in the name of national security.
• Pressure of international community   to protect human rights.

In this context, the Protection of Human Rights Act, 1993 was enacted, which enabled the establishment of the National Human Rights Commission in Delhi and 14 state human rights commissions around the country.

Limitations of NHRC

Issue 1 : Flaws in Selection process

• Not sufficiently broad and transparent
• No  advertisement for vacancies in top posts is given out

Issue 2 : Flaws in Investigation process

• Non-independent investigators – involvement of serving or retired police officers in the investigation of human rights violations, particularly where the alleged perpetrators is the police itself.

Issue 3 : Composition – Less representation to women.

• Only 20% of the NHRC’s staff is women and since 2004, there hasn’t been a single woman on the governing body.
• The legislative requirement of having an ex-CJI as Chairperson and choosing members of the senior judiciary restricts the potential pool of candidates who can be appointed, especially women.

Issue 4 : Outright rejection of a recommendation .

• Governments often ignore the recommendation completely 

5 . Other problems

• Mammoth backlog of cases-around  40,000 cases pending
• Time bar :  Under the Act, human rights commissions cannot investigate an event if the complaint was made more than one year after the incident.Therefore, a large number of genuine grievances go unaddressed.
• Powers  of the National Human Rights Commission relating to violations of human rights by the armed forces have been restricted to simply seeking a report from the Government, (without being allowed to summon witnesses), and then issuing recommendations.

Suggested proposals

If human rights commissions are to truly protect and promote human rights in India, changes must be made to enable them to become more effective institutions. Some suggested proposals are:

More teeth	Their decisions should be immediately made enforceable by the government.
Including armed forces in the ambit	Not allowing commissions to independently investigate complaints against the military  furthers the culture of impunity.
Commission membership	Commission must include civil society human rights activists as members.
Separate agency to investigate police-related complaints	International experience: 1. UK has an Independent Police Complaints Commission 2. South Africa has an Independent Complaints Directorate 3. Brazil has Police Ombudsmen offices

Advocate General of State

• The Constitution (Article 165) has provided for the office of the advocate general for the states.
• He is the highest law officer in the state. Thus he corresponds to the Attorney General of India.

Appointment and Term

• The advocate general is appointed by the Governor.
• He must be a person who is qualified to be appointed a judge of a High Court.
• In other words, he must be a citizen of India and must have held a judicial office for ten years or been an advocate of a high court for ten years.
• The term of office of the advocate general is not fixed by the Constitution.
• Further, the Constitution does not contain the procedure and grounds for his removal. He holds office during the pleasure of the Governor. This means that he may be removed by the governor at any time. He may also quit his office by submitting his resignation to the governor.
• Conventionally, he resigns when the government (Council of Ministers) resigns or is replaced, as he is appointed on its advice.
• The remuneration of the advocate general is not fixed by the Constitution. He receives such remuneration as the Governor may determine.

Duties and Functions

• To  give advice to the government of the state upon such legal matters which are referred to him by the governor.
• To perform such other duties of a legal character that are assigned to him by the governor.
• To discharge the functions conferred on him by the Constitution or any other law.

In the performance of his official duties, the advocate general is entitled to appear before any court of law within the state. Further, he has the right to speak and to take part in the proceedings of both the Houses of the state legislature or any committee of the state legislature of which he may be named a member, but without a right to vote. He enjoys all the privileges and immunities that are available to a member of the state legislature.

Attorney General of India

• Article 76 has provided for the office of the Attorney General for India
• He is the highest law officer in the country.

Appointment and Term

• Attorney General (AG) is appointed by the President.
• He must be a person who is qualified to be appointed a judge of the Supreme Court. In other words, he must be a citizen of India and he must have been a judge of some high court for five years or an advocate of some high court for ten years or an eminent jurist, in the opinion of the president.
• Term of office of the Attorney General is not fixed by the Constitution. Further, the Constitution does not contain the procedure and grounds for his removal. He holds office during the pleasure of the president. This means that he may be removed by the president at any time. He may also quit his office by submitting his resignation to the president. Conventionally, he resigns when the government (council of ministers) resigns or is replaced, as he is appointed on its advice.
• Remuneration of the Attorney General is not fixed by the Constitution. He receives such remuneration as the President may determine.

Duties and Functions

As the chief law officer of the Government of India, the duties of the Attorney General include the following:

• To give advice to the Government of India upon such legal matters, which are referred to him by the president.
• To perform such other duties of a legal character that are assigned to him by the President.
• To discharge the functions conferred on him by the Constitution or any other law.

President has assigned the following duties to the Attorney General

• To appear on behalf of the Government of India in all cases in the Supreme Court in which the Government of India is concerned.
• To represent the Government of India in any reference made by the president to the Supreme Court under Article 143 of the Constitution.
• To appear (when required by the Government of India) in any high court in any case in which the Government of India is concerned.

Rights and Limitations

• In the performance of his official duties, the Attorney General has the right of audience in all courts in the territory of India.
• Further, he has the right to speak and to take part in the proceedings of both the Houses of Parliament or their joint sitting and any committee of the Parliament of which he may be named a member, but without a right to vote.
• He enjoys all the privileges and immunities that are available to a member of Parliament.

Following limitations are placed on the Attorney General in order to avoid any complication and conflict of duty

• He should not advise or hold a brief against the Government of India.
• He should not advise or hold a brief in cases in which he is called upon to advise or appear for the Government of India.
• He should not defend accused persons in criminal prosecutions without the permission of the Government of India.
• He should not accept appointment as a director in any company or corporation without the permission of the Government of India.

However, the Attorney General is not a full-time counsel for the Government. He does not fall in the category of government servants. Further, he is not debarred from private legal practice.

Solicitor General of India

• In addition to the Attorney General, there are other law officers of the Government of India. They are the solicitor general of India and additional solicitor general of India. They assist the Attorney General in the fulfilment of his official responsibilities.
• It should be noted here that only the office of the Attorney General is created by the Constitution. In other words, Article 76 does not mention about the solicitor general and additional solicitor general.

The Attorney General is not a member of the Central cabinet. There is a separate law minister in the Central cabinet to look after legal matters at the government level.

Special  Officer for  Linguistic  Minorities

• Originally, the Constitution of India did not make any provision with respect to the Special Officer for Linguistic Minorities.
• Later, the States Reorganisation Commission (1953-55) made a recommendation in this regard.
• Accordingly, the Seventh Constitutional Amendment Act of 1956 inserted a new Article 350-B in Part XVII of the Constitution.This article contains the following provisions
  • There should be a Special Officer for Linguistic Minorities. He is to be appointed by the President of India
  • It would be the duty of the Special Officer to investigate all matters relating to the safeguards provided for linguistic minorities under the Constitution
  • He would report to the President upon those matters at such intervals as the President may direct. The President should place all such reports before each House of Parliament and send to the governments of the states concerned.

Qualifications

• Constitution does not specify the qualifications, tenure, salaries and allowances, service conditions and procedure for removal of the Special Officer for Linguistic Minorities.

Commissioner of Linguistic Minorities

• In pursuance of the provisions of Article 350-B of the Constitution, Office of Special Officer for Linguistic Minorities was created in 1957. He is designated as the Commissioner for Linguistic Minorities.
• Commissioner has his headquarters at Allahabad (Uttar Pradesh). He has three regional offices at Belgaum (Karnataka), Chennai (Tamil Nadu) and Kolkata (West Bengal). Each is headed by an Assistant Commissioner.
• Commissioner is assisted at headquarters by Deputy Commissioner and an Assistant Commissioner. He maintains liaison with the State Governments and Union Territories through nodal officers appointed by them.
• At the Central level, the Commissioner falls under the Ministry of Minority Affairs. Hence, he submits the annual reports or other reports to the President through the Union Minority Affairs Minister

Functions

• To investigate all matters related to safeguards provided to the linguistic minorities
• To submit to the President of India, the reports on the status of implementation of the Constitutional and the nationally agreed safeguards for the linguistic minorities
• To monitor the implementation of safeguards through questionnaires, visits, conferences, seminars, meetings, review mechanism, etc

Objectives

• To provide equal opportunities to the linguistic minorities for inclusive development and national integration
• To spread awareness amongst the linguistic minorities about the safeguards available to them
• To ensure effective implementation of the safeguards provided for the linguistic minorities in the Constitution and other safeguards, which are agreed to by the States / UTs
• To handle the representations for redress of grievances related to the safeguards for linguistic minorities”

National Commission for Socially & Educationally Backward Classes (NCSEBC)

102nd Amendment Act gave constitutional status to National Commission for Socially and Educationally Backward Classes  .

Features of Bill

• Constitutional status: Constitution of a Commission under Article 338B for socially and educationally backward classes. (Earlier National Commission for Backward Caste was Statutory Body)
• One list instead of two: It stipulates only one central list for OBC, same as that for Scheduled Caste and Scheduled Tribe. There would be no parallel existence of central and state OBC lists. 
• Parliament to decide on inclusion/exclusion – Law of Parliament (State Legislature) will be required if the list of backward classes is to be amended.  (Earlier done by Executive order of Union and State Governments)

Functions of Commission under Article 338 B

• Look into inclusion of Castes in List of Socially and Educationally Backward Classes and recommend it to President
• Look into Development & Welfare needs in addition to reservations to be looked after by NCSEBC
• Hear Grievances  of socially and educationally backward classes, a function which has been discharged so far by the National Commission for Scheduled Castes

Structure

• The Commission, which will have
  • Chairperson
  • Vice-chairperson and
  • 3 members

Benefits of Amendment

1. Transparency: It is difficult to get an arbitrary decision passed in the Parliament than through an executive order.
2. Stopping Political opportunism: Exposure of state and central governments to pressures of non-backward communities to force their way into the list would reduce as opposition cannot easily blame the government 
3. Constitutional authority: Giving it a constitutional authority will ensure it has more power in terms of hearing complaints from OBC members like SC/ST commissions
4. Taking Holistic Measures to address issues of Socially and Educationally Backward Classes : It will look into developmental and welfare measures of Socially & Educationally Backward Classes along with Reservation

Issues with the Amendment and Commission

• Flawed Composition : In accordance with SC judgement on Mandal case to have NCBC as an expert body, NCBC act 1993 provided that
  • Chairman should be a former judge
  • One member should be a social scientist
  • Two persons with special knowledge of the socially backward classes.

This feature of expert body is not provided for in the composition of the NCSEBC Bill (Constitutional Amendment not passed Rajya Sabha  due to composition)

• Against Federal structure: Bill makes Parliament the final authority on inclusion of communities in the OBC list and, therefore, takes away the authority of states which can now send requests to the NCSEBC

• Recommendations of new NCSEBC still not binding. 

• On a similar footing as SC/STs: The amendment has brought both BCs and SC/STs in the same league in terms of discrimination, exclusion and violence which lacks logic and historical justification.

National Commission for Scheduled Tribes

Why Separate NCST

• It is a constitutional body in the sense that it is directly established by Article 338-A of the Constitution
• Geographically and culturally, the STs are different from the SCs and their problems are also different from those of SCs. In 1999, a new Ministry of Tribal Affairs was created to provide a sharp focus to the welfare and development of the STs. 
• Hence, in order to safeguard the interests of the STs more effectively, it was proposed to set up a separate National Commission for STs by bifurcating the existing combined National Commission for SCs and STs. This was done by passing the 89th Constitutional Amendment Act of 2003.

Composition of NCST

It  consists of

1. Chairperson
2. Vice-chairperson
3. 3 other members.

They are appointed by President by warrant under his hand & seal. Their conditions of service and tenure of office are also determined by the President

Functions of the Commission

1. To investigate and monitor all matters relating to the constitutional and other legal safeguards for the STs and to evaluate their working;
2. To inquire into specific complaints with respect to the deprivation of rights and safeguards of the STs;
3. To  participate and advise on the planning process of socio-economic development of the STs and to evaluate the progress of their development under the Union or a state;
4. To present to the President, annually and at such other times as it may deem fit, reports upon the working of those safeguards;
5. To make recommendations as to the measures that should be taken by the Union or a state for the effective implementation of those safeguards and other measures for the protection, welfare and socio-economic development of the STs; and
6. To  discharge such other functions in relation to the protection, welfare and development and advancement of the STs as the President may specify.

Other Functions of the Commission

In 2005, the President specified the following other functions of the Commission in relation to the protection, welfare and development and advancement of the STs

• Measures to be taken over conferring ownership rights in respect of minor forest produce to STs living in forest areas
• Measures to be taken to safeguard rights of the tribal communities over mineral resources, water resources etc., as per law
• Measures to be taken for the development of tribals and to work for more viable livelihood strategies
• Measures to be taken to improve the efficacy of relief and rehabilitation measures for tribal groups displaced by development projects
• Measures to be taken to prevent alienation of tribal people from land and to effectively rehabilitate such people in whose case alienation has already taken place
• Measures to be taken to elicit maximum cooperation and involvement of tribal communities for protecting forests and undertaking social afforestation
• Measures to be taken to ensure full implementation of the Provisions of Panchayats (Extension to the Scheduled Areas) Act, 199
• Measures to be taken to reduce and ultimately eliminate the practice of shifting cultivation by tribals that lead to their continuous disempowerment and degradation of land and the environment

Report of the Commission

• Commission presents an annual report to the President. It can also submit a report as and when it thinks necessary.
• President places all such reports before the Parliament, along with a memorandum explaining the action taken on the recommendations made by the Commission. The memorandum should also contain the reasons for the non-acceptance of any of such recommendations.
• President also forwards any report of the Commission pertaining to a State Government to State Governor. Governor places it before State Legislature, along with a memorandum explaining the action taken on the recommendations of the Commission. The memorandum should also contain the reasons for the non-acceptance of any of such recommendations.

Powers of the Commission

• Commission is vested with the power to regulate its own procedure.
• Commission, while investigating any matter or inquiring into any complaint, has all the powers of a civil court trying a suit and in particular in respect of the following matters:
  • Summoning  and enforcing the attendance of any person from any part of India and examining him on oath;
  • Requiring the discovery and production of any document;
  • Receiving evidence on affidavits;
  • Requisitioning any public record from any court or office;
  • Issuing summons for the examination of witnesses and documents; and
  • Any other matter which the President may determine.

Central Government & State Governments are required to consult the Commission on all major policy matters affecting STs.

National Commission for Scheduled Castes

It  is a constitutional body in the sense that it is directly established by Article 338 of the Constitution.

Evolution of the Commission

• Originally, Article 338 of the Constitution provided for the appointment of a Special Officer for Scheduled Castes (SCs) and Scheduled Tribes (STs) to investigate all matters relating to the constitutional safeguards for the SCs and STs and to report to the President on their working
• Later, the 65th Constitutional Amendment Act of 1990 provided for the establishment of a high level multi-member National Commission for SCs and STs in the place of a single Special Officer for SCs and STs. 
• Again, the 89th Constitutional Amendment Act of 2003  bifurcated the combined National Commission for SCs and STs into two separate bodies, namely, National Commission for Scheduled Castes (under Article 338) and National Commission for Scheduled Tribes (under Article 338-A).

Composition

It consists of

1. Chairperson
2. Vice-chairperson and
3. Three  other members.

They are appointed by the President by warrant under his hand and seal. Their conditions of service and tenure of office are also determined by the President.

Functions of the Commission

• To investigate and monitor all matters relating to the constitutional and other legal safeguards for the SCs and to evaluate their working;
• To inquire into specific complaints with respect to the deprivation of rights and safeguards of the SCs
• To participate and advise on the planning process of socio-economic development of the SCs and to evaluate the progress of their development under the Union or a state;
• To present to the President, annually and at such other times as it may deem fit, reports upon the working of those safeguards;
• To make recommendations as to the measures that should be taken by the Union or a state for the effective implementation of those safeguards and other measures for the protection, welfare and socio-economic development of the SCs; and
• To discharge such other functions in relation to the protection, welfare and development and advancement of the SCs as the President may specify.

Report of the Commission

• Commission presents an annual report to the President. It can also submit a report as and when it thinks necessary.
• President places all such reports before the Parliament, along with a memorandum explaining the action taken on the recommendations made by the Commission. The memorandum should also contain the reasons for the non-acceptance of any of such recommendations.
• President also forwards any report of the Commission pertaining to a state government to the state Governor. Governor places it before the state legislature, along with a memorandum explaining the action taken on the recommendations of the Commission. The memorandum should also contain the reasons for the non-acceptance of any of such recommendations

Powers of the Commission

• Commission is vested with the power to regulate its own procedure.
• Commission, while investigating any matter or inquiring into any complaint, has all the powers of a civil court trying a suit and in particular in respect of the following matters:
  • Summoning  and enforcing the attendance of any person from any part of India and examining him on oath;
  • Requiring the discovery and production of any document;
  • Receiving evidence on affidavits;
  • Requisitioning any public record from any court or office;
  • Issuing summons for the examination of witnesses and documents; and
  • Any other matter which the President may determine.

The Central government and the state governments are required to consult the Commission on all major policy matters affecting the SCs.

The Commission is also required to discharge similar functions with regard to  Anglo-Indian Community as it does with respect to the SCs.

Finance Commission

• It deals with Article 280 of Indian constitution 
• It is a  quasi judicial body.
• Constituted by the President  every fifth year or  earlier as he considers necessary.
• Finance Commission consists of a Chairman and four other members 
• Constitution authorises the Parliament to determine the qualifications . Accordingly, Parliament has specified 
  • Chairman: person having experience in public affairs
  • Four other members should be selected from amongst the following:
    • A judge of High Court or one qualified to be appointed as one.
    • A person who has specialised knowledge of accounts of the government.
    • A person who has wide experience in financial matters .
    • A person who has special knowledge of economics.

Functions

Finance Commission is required to make recommendations to the President of India on the following matters:

• Distribution of the net proceeds of divisible pool of taxes to be shared between  Center and states (Vertical Distribution) , and the allocation between states (Horizontal Distribution)
• Principles that should govern the grants-in-aid to the states by the Center
• Measures needed to augment the consolidated fund of a state to supplement the resources of  Panchayats and municipalities
• Any other matter referred to it by the President in the interests of sound finance.

Constitution also allows Finance Commission to make broader recommendations in the interests of sound finance.

The  commission submits its report to President. He lays it before both the Houses of Parliament along with an explanatory memorandum as to the action taken on its recommendations.

Till 1960, the commission also suggested the grants given to the States of Assam, Bihar, Odisha and West Bengal in lieu of assignment of any share of the net proceeds in each year of export duty on jute and jute products. These grants were to be given for a temporary period of ten years from the commencement of the Constitution.

Advisory Nature

• Recommendations made by Finance Commission are only of advisory nature and hence, not binding 
• As rightly observed by Dr. P.V. Rajamannar, the Chairman of the Fourth Finance Commission, “Since the Finance Commission is a constitutional body expected to be quasi-judicial, its recommendations should not be turned down by the Government of India unless there are very compelling reasons”

Finance Commission & Fiscal Federalism

• Constitution envisages the Finance Commission as the balancing wheel of the Fiscal federalism in India.

• Every successive Finance Commission has to do a political balancing act by giving more resources to the states given the growing importance of sub-national governments in the Indian political economy.
  • 1st Finance Commission ( K.C. Neogy)   recommended –  10% Share
  • 14th Finance Commission (Y. V. Reddy) recommended –  42%.

• But at the same time, it also ensures that center is not fiscally constrained given its role in key national public goods such as defence.

15th Finance Commission

Nov 2017 : Government had approved the setting up of 15th Finance Commission  with N.K. Singh as its Chairman. It has been asked to submit its report by 30 October 2019.

Terms of Reference

• Above Terms of References which are same for all Finance Commissions
• Commission is to finalise its tax-devolution formula after factoring in the impact on the Union’s fiscal situation, keeping in mind “the continuing imperative of the national development programme including New India – 2022” and government’s commitment to compensate states’ loss due to GST.
• Finance Commission will also propose performance-based incentives (PBI) in areas such as
  1. Efforts made by the states in expansion and deepening of the tax net under GST
  2. Efforts and progress made in moving towards replacement rate of population growth
  3. Improvement in ease of doing business
  4. Sanitation
  5. Reign in populist measures
  6. Promoting savings through adoption of direct benefit transfers
  7. Promoting a digital economy; etc.

South Indian States vs 15th Finance Commission

• 14th Finance Commission had used both Census 1971 and 2011  for horizontal distribution of taxes among states. Census-1971 population was given 17% weight and 2011 given 10%  
• 15th Finance Commission is ordered to use the Census 2011 data only.

Issue : Southern states believe that the recommendations will not recognise their effort to check population growth, and will impact the transfer of resources. 

Southern States allege that Center is funding Northern States from their taxes. For every 1 ₹ that North Indian States give , they get 3₹ back and for every 1 ₹ that Southern States give , they get 50 paisa .