UPSC Prelims 2002 Q80: Indian Polity – Public Finance & Finance Commission
Which one of the following authorities recommends the principles governing grants - in - aid
of the revenues to the states out of the Consolidated Fund of India?
- (a) Finance Commission
- (b) Inter - State Council
- (c) Union Ministry of Finance
- (d) Public Accounts Committee
Answer: (a) Finance Commission
Explanation
Authority recommending principles for grants-in-aid to States
| Body | Role |
|---|---|
| Finance Commission | Recommends the principles governing grants-in-aid from the Consolidated Fund of India (Article 275) |
| Inter-State Council | Forum on Centre-State issues (Article 263) |
| Union Ministry of Finance | Administers finances, does not set the principles |
| Public Accounts Committee | Examines audit reports of the CAG |
Under Article 280 the Finance Commission recommends the distribution of taxes and the principles governing grants-in-aid of the revenues of the States out of the Consolidated Fund of India under Article 275.
Answer: (a) Finance Commission.
Why each option is right or wrong
- (a) CORRECT. The Finance Commission recommends the principles of grants-in-aid.
- (b) Incorrect. The Inter-State Council deals with Centre-State coordination.
- (c) Incorrect. The Ministry of Finance does not recommend the principles.
- (d) Incorrect. The Public Accounts Committee scrutinises expenditure after it is made.
Key point
Article 280: Finance Commission every five years; Article 275: statutory grants-in-aid; Article 282: discretionary grants.
Remember
Finance Commission recommends the principles of grants-in-aid to States.
Common mistakes
- Choosing the Ministry of Finance as the money authority.
- Confusing the Finance Commission with the Planning Commission.
- Thinking the PAC recommends grants.
Exam tip
Grants-in-aid principles are a Finance Commission task by Article 280.
Sources
- Constitution of India — Articles 275 and 280
- M. Laxmikanth — Indian Polity