The State Finance Commissions are constituted under clause 1 of Article 243 (I) and clause 1 of 243 (Y) of the Constitution of India, which have been enacted through the 73rd and 74th amendments of the Constitution of India, 1992.
Article 243-I mandates the establishment of a State Finance Commission by the Governor every five years. The Commission is tasked with reviewing the financial position of Panchayati Raj Institutions (PRIs) and to strengthen their financial position, recommend allocation of resources to them in the form of devolution of the state’s revenue, allocation of grants-in-aid from state’s consolidated fund and assignment of taxes to be collected and appropriated by them. Article 243-Y extends similar provisions to Urban Local Bodies, ensuring that municipal governments also receive equitable resource allocations.
In line with these constitutional amendments, Jharkhand operationalized its commitment to local self-governance through the Jharkhand Panchayati Raj Act (JPRA), 2001, and the Jharkhand Municipal Act (JMA), 2011. These acts laid the legal foundation for establishing the State Finance Commission (SFC) in the state to ensure justifiable resource allocation between the state government and local self-government. These acts were subsequently amended as the JPRA (amendment) Act 2015 and the JMA (amendment) Act 2021.
(1) 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 as to—
(2) The Legislature of a State may, by law, provide for the composition of the Commission, the qualifications which shall be requisite for appointment as members thereof and the manner in which they shall be selected.
(3) The Commission shall determine its procedure and shall have such powers in the performance of its functions as the Legislature of the State may, by law, confer on it.
(4) The Governor shall cause every recommendation made by the Commission under this article, together with an explanatory memorandum as to the action taken thereon, to be laid before the Legislature of the State.
(1) The Finance Commission constituted under Article 243-I shall also review the financial position of the Municipalities and make recommendations to the Governor as to—
(2) The Governor shall cause every recommendation made by the Commission under this article, together with an explanatory memorandum as to the action taken thereon, to be laid before the Legislature of the State.
(1) The State Government shall as soon as possible and thereafter on the expiration of every five years, constitute a Finance Commission in the prescribed manner to review the financial position of the Gram Panchayats, Panchayat Samities and Zila Parishads and to advise and make recommendations to the Government on financial matters, which shall include—
(2) The Finance Commission shall consist of a Chairman and two other members.
(3) The Chairman and members of the Finance Commission shall possess such qualifications and shall be appointed in such manner as may be prescribed by the Government.
(4) The Finance Commission shall determine its own procedure.
(5) The Chairman or a member of the Finance Commission may resign his office by writing under his hand and addressed to the Finance Secretary to the Government, but he shall continue in office until his resignation is accepted by the Government.
(6) The casual vacancy created by the resignation or for any other reason may be filled by fresh appointment, and such appointee shall hold office for the remaining period of the original term.
(7) The Commission shall have the following powers—
(8) The Governor shall cause every recommendation made by the Finance Commission under this section, together with an explanatory memorandum as to the action taken thereon, to be laid before the Legislative Assembly.
After taking into consideration the recommendations of the State Finance Commission constituted under Article 243-Y read with Article 243-I of the Constitution of India, the State Government shall determine—
