State Finance Commission: Article 243I

Functions:

device principles governing distribution b/w states & local bodies of net proceeds of taxes, duties, tolls etc levied by state govt
determine tools, taxes, duties which may be assigned to / appropriated by local governments
decide upon grant in aids from Consolidated Fund of State
recommend measures to improve financial position of local bodies & sound fiscal management
advice on claims to resource by state govt & local govt
impart greater stability & predictability to transfer mechanism & flow of resources to third tier

irregular, non timely constitution of SFC
- only 13 states constituted 5th SFC which was due by 2014-13
inability of SFC to submit their report on time (avg 32 months)
delays in tabling action taken report in state legislature
unavailability of office space, basic offic infra
lack of technical staff due to temporary nature of institution
deficiency of reliable data regd. local bodies
non involvement of financial experts
- instead, retired bureaucrats, senior politicians dominate the commission
inconsistency in acceptance of SFC recommendations by state govt & arbitrary rejections