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State Finance Commission | Kerala PSC LDC
- Fact 1 of 8🏛️
Article 243I: the State Finance Commission
Article 243I of the Constitution, inserted by the 73rd Amendment, requires every state to constitute a State Finance Commission to review the finances of panchayats. It is a key constitutional provision for Kerala PSC Constitution questions.
- Fact 2 of 8⏳
A fresh SFC every five years
The Governor must constitute a State Finance Commission at the expiry of every fifth year, under Article 243I. This keeps local body finances reviewed at regular intervals.
- Fact 3 of 8🧑⚖️
Who appoints the SFC?
The State Finance Commission is constituted by the Governor of the state, not by the President or Parliament. Its chairman and members are appointed by the Governor.
- Fact 4 of 8🔀
SFC vs Union Finance Commission
The State Finance Commission is set up under Article 243I, while the Union Finance Commission is under Article 280. The SFC divides resources between the state and local bodies; the Union body divides taxes between the Centre and states.
- Fact 5 of 8🏘️
Same rules extended to municipalities
Article 243Y of the Constitution, inserted by the 74th Amendment, applies the SFC provisions of Article 243I to municipalities. So municipal bodies also get a State Finance Commission.
- Fact 6 of 8📜
The Eleventh Schedule's 29 subjects
The Eleventh Schedule of the Constitution lists 29 subjects for panchayats, which the SFC helps fund through fair revenue sharing. It is a frequently asked fact in Kerala PSC exams.
- Fact 7 of 8🏙️
The Twelfth Schedule's 18 subjects
The Twelfth Schedule lists 18 subjects for municipalities. Knowing it alongside the Eleventh Schedule helps distinguish panchayat and municipal functions in competitive exams.
- Fact 8 of 8📑
Report goes to the Legislature
The Governor must lay every SFC recommendation before the state legislature, along with an explanatory memorandum on the action taken. This ensures transparency in local body finance.
