Question

Which authority recommends the principles governing the grants-in-aid of the revenues of
the States out of the Consolidated Fund of India?
A) Public Accounts Committee
B) Union Ministry of Finance
C) Finance Commission
D) Interstate council

Answer 1

Hint: Redressing vertical imbalances in taxation powers and spending liabilities between the centre and the states, as well as equalisation of all public utilities across the states, are the main features of this Commission.

Complete answer:
Let us look into the given options:
Option (A) The Public Accounts Committee reviews the accounts showing the allocation of amounts given by Parliament to fulfil the Government of India's spending. Hence option (A) is incorrect
Option (B) Union Ministry of Finance department is in charge of financial rules and regulations, financial penalties affecting all Ministries and offices of the Government of India, and cost accounting guidance to Ministries and government undertakings. Hence, option (B) is incorrect
Option (C) Finance Commission was established to make recommendations to the president about how the net proceeds of taxes have to be distributed between the Union and the states, as well as how the funds have to be distributed among the states. Hence, option (C) is correct.
Option (D) The Inter-State Council is a consultative body tasked with investigating and debating issues of mutual concern between the Union and one or more states, as well as making recommendations for greater strategy and action planning on these issues. Hence, option (D) is incorrect.

Therefore, the Finance commission recommends the principles governing the grants-in-aid of the revenues of the States out of the Consolidated Fund of India. Hence, option (C) is correct.

Note: The Indian President created the finance commission under Article 280 of the Indian Constitution. It was developed to describe the financial links between the federal government and the states. It was founded in 1951.