- The Finance Commission is a constitutional body constituted under Article 280 of the Constitution of India. - Its main task is to make recommendations to the President of India on: - The distribution of the net proceeds of taxes between the Union and the States (vertical devolution). - The allocation between the States of the respective shares of such proceeds (horizontal devolution). - The principles that should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India. - Measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State. - Preparing the Annual Budget is the function of the Union Government (Ministry of Finance). - Advising the President on financial matters is too broad; the Finance Commission's advice is specific to fiscal federalism and resource distribution. - Allocating funds to ministries is part of the budgeting process carried out by the executive government, not the Finance Commission.
The primary function of the Finance Commission in India is to
Asked in UPPCS Prelims 2000 · Topic: The Finance Commission (Core functions: Vertical and horizontal devolution of taxes)
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Answer: A. distribute revenue between the Centre and the States
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