With reference to the Finance Commission of India, consider the following statements: 1. The Finance Commission is a statutory body. 2. The Finance Commission was established under Article 280 of the Constitution. 3. The recommendations made by the Finance Commission are only advisory in nature. 4. The first Finance Commission was established in 1950. Which of the statements given above is/are correct?

Explanation

Article 280 of the Constitution of India provides for the constitution of a Finance Commission by the President at intervals of every five years, or earlier as required. Therefore, it is a constitutional body. The Chairperson and members are appointed by the President. Its main function is to make recommendations to the President regarding the distribution of the net proceeds of taxes between the Union and the States, and the principles governing the allocation of such proceeds among the States. The recommendations of the Finance Commission are advisory in nature. The Finance Commission also recommends the principles governing grants-in-aid of the revenues of the States out of the Consolidated Fund of India. It submits its report to the President. It is noteworthy that the first Finance Commission was constituted on 22 November 1951 under the chairmanship of K. C. Neogy. The Chairman of the 16th Finance Commission is Arvind Panagariya.