| Consider the following statements regarding the Union Finance Commission. |
| 1. The Chairman of Finance Commission is required to have wide experience or expertise in any one of public finance, administration, economics etc. |
| 2. Finance Commission recommendations are binding on the government. |
| 3. Terms of reference of the Finance Commission are exhaustively listed in the Constitution. |
| 4. It also has to consider the recommendations made by the various State Finance Commissions. |
| Which of the statement(s) given above is/are correct? |
A) 1 and 2
B) 2 and 3
C) 1, 2 and 4
D) Only 4
Correct Answer: D
Solution :
[d] Statement 1 is incorrect, because the only qualification prescribed in the Constitution to be appointed as Finance Commission Chairman is to have experience in public affairs. Statement 2 is also incorrect because Finance Commission recommendations are not binding on the government although a tradition has developed, whereby- the Union Government accepts all Finance Commission recommendations. Statement 3 is also incorrect because the terms of reference of Finance Commission are not exhaustively listed in the Constitution and these are provided by the Union Government, while constituting the Finance Commission through the President. Statement 4 is the only correct statement.
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