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Under Article 280, the Finance Commission is constituted by the President every ______ years to recommend distribution of tax revenues between Union and States and grants-in-aid principles, serving as institutionalized mediator of fiscal federalism.
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Answer: 5
Finance Commission institutional design: (a) Constitutional mandate: Article 280 requires President to constitute FC every 5 years (or earlier), ensuring regular, predictable fiscal federalism review, (b) Composition: Chairman + 4 members with expertise in public affairs, finance, economics, administration, law — independent, technical body, (c) Functions: (i) Recommend vertical devolution: Union-State tax share (15th FC: 41% to States), (ii) Horizontal distribution: Among States using criteria like population (1971/2011), area, income distance, forest cover, demographic performance, (iii) Grants-in-aid: To States in need, for tribal welfare, local body augmentation, (iv) Review financial position: Suggest measures to improve State finances, (d) Impact: FC recommendations shape fiscal federalism; 15th FC (2020-25) introduced new criteria (demographic performance, tax effort) to balance equity (needier States) with efficiency (rewarding reforms), (e) Illustrates institutionalized fiscal federalism: Regular, technical mediation of Centre-State financial claims to balance equity and efficiency; independent Commission depoliticizes resource distribution, enabling cooperative federalism.