Madhya Pradesh State Finance Commission :

In response to the Constitutional requirement, under Article-243 (I) and 243 (Y), the erstwhile state of Madhya Pradesh, of which Chhattisgarh was a part, constituted the First State Finance Commission in 1995, under the M.P. Rajya Vitta Ayog Adhiniyam. The Commission submitted its reports, one relating to Panchyati Raj Institutions and the other to Urban Local Bodies, in June 1999, and its recommendations covered the period of 1996- 2001. The Second State Finance Commission was appointed in Madhya Pradesh in June 1999 and its reports were submitted in December, 2003. Its recommendations covered the period of 2001-2006. When the present State of Chhattisgarh was carved out of Madhya Pradesh on 1st November 2000, the undivided State of Madhya Pradesh was being covered by the recommendations of the First Finance Commission. 

Article 243-I of the Indian Constitution prescribes that the Governor of a State shall, as soon as may be within one year from the commencement of the Constitution (Seventy-third Amendment) Act, 1992, and thereafter at the expiration of every fifth year, constitute a Finance Commission to review the financial position of the Panchayats and to make recommendations to the Governor.

Similar to the Finance Commission under article 280, for the centre, since 1993, also have State Finance Commission in all the states of India to review the financial position of the Panchayats and to make recommendations as to –

• The distribution between the State and the Panchayats of the net proceeds of taxes, duties, tolls and fees leviable by the State which may be divided between them and how allocation would be made among various levels of Panchayats
• What taxes, duties, tolls and fees may be assigned to the Panchayats;
• Grant-in-aid to the Panchayats.

Aims of the Madhya Pradesh Finance Commission :  Finance Commission follow these targets for smooth functioning of the committee.

• Determining the duties, tolls, taxes, and fees, which are to be imposed on the state.
• The allocation of the total proceeds pertaining to taxes, tolls, duties, and fees imposed by the state to the different Panchayats.
• The allocation of the total proceeds from the taxes, tolls, duties, and fees imposed by the state, which is to be divided between the State and the panchayats.
• Determining the financial roles of the Panchayats.
• The financial assistance from the State Consolidated Fund.

The Functions of the State Finance Commission are as Follows :

•  Reviewing the economic condition of the various Panchayati raj institutions and municipal bodies that are there in the state.
•  Taking such steps that help in boosting the financial condition of the various municipal bodies and Panchayati raj institutions in the state
•   Allotting the funds to the various Panchayati raj institutions and municipal bodies in the state from the Consolidated Fund of the State.
• Acting as an arbiter between the central and the state governments with regard to issues that are of financial nature.
• Transferring funds that are granted by the central government to the state government
• Distributing between the various municipal bodies and Panchayati raj institutions that are there within the state and the state government the total proceeds of taxes, fees, tolls, and duties that are charged by the state government.
• Determining the taxes, tolls, duties, and fees that may be levied by the various Panchayati raj institutions and municipal bodies that are there within the state           

Critical Appraisal :

To harness the concept and aspiration of Panchayati Raj Institution in India, the role of State Finance Commission has to be very critical. The devolution of power can be realised if the finances are prudently available till the last rank officials with ample autonomy and authority. It is in these aspects, that the role of State Finance Commission can be looked into.                                                    

Positives facts about States Finance Commission:

• Enhanced the idea of democracy.
• Greater devolutionary aspects of the government and governance.
• Empowerment of local people and local leaders.
• Efficient and timely accessibility of funds to remote corners.
• Negatives Facts about States Finance Commission.
• States are too reluctant to let loose their financial authority.
• Too much of interference and encroachment in the autonomy and working of State Finance Commission.
• States themselves do not have ample funds at their disposal; hence even sharing that meagre amount is always resisted by the state government.
• The idea of State Finance Commission has not has not been implemented in true spirit.

Finance Commission-Steps for rural development :

• The Finance Commission of Uttaranchal constituted under Article 243 Sec I would attain to similar matters referred by the municipalities as per the Article 243SecY of the Constitution.
• All recommendations by the Governor should be made together with an explanatory memorandum which is to be presented before the Legislature of the State.
• To attain to matters mentioned by the Governor to the Finance Commission regarding the proper finance implementations of the Panchayats.
• The provide improvement to the financial performance of the Panchayats, which would help in the development of the rural sector.