CONSTITUTIONAL LAW II

“A DETAIL STUDY OF THE

FINANCE COMMISSION AND
PLANNING COMMISSION IN
INDIA”

JYOTI BHUTIA
ROLL NO.-02,
BCOM.LLB
2019-2020
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 CERTIFICATE
This is to certify that JYOTIBHUTIA, has successfully completed his/her paper
1- English and communication assignment “THE DETAIL STUDY OF THE
FINANCE COMMISSION AND PLANNING COMMISSION IN INDIA”.

In partial fulfilment of first semester of degree course in law, in the

academic year 2018-2019.

Date:
Place: Nerul, Navi Mumbai.

Head of Subject teacher

Dept. school of law Dept. school of law
DYPP, Nerul DYPP, Nerul

Principal
DYPP, Nerul
DEPARTMENT OF SCHOOL OF LAW
DR. D.Y. PATIL DEEMED TO BE UNIVERSITY, VIDYANAGAR,
SEC-7 NERUL, NAVI MUMBAI – 400 706

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 ACKNOWLEDGMENT
I would like to express my special thanks of gratitude to my teacher ADV.
BARSHA MITRA as well as our principal DR. AJAY.W. PATIL who gave
me the golden opportunity to do this wonderful project on the topic “THE DETAIL
STUDY OF THE FINANCE COMMISSION AND PLANNING COMMISSION IN INDIA”,
which also helped me in doing a lot of Research and I came to know about so
many new things I am really thankful to them.

Secondly, I would also like to thank my parents and friends who helped me a lot
in finalizing this project within the limited time frame.

- JYOTI BHUTIA

B.COM LLB

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 INDEX
TOPIC PAGE
NO.
1. ABSTRACT 5

2. INTRODUCTION 6-7

3. FINANCE COMMISSION 8-14

-HISTORY 8
-ARTICLE 280 8-10
-FINANCE COMMISSION ACT 1951 10-11
-COMPOSITION 11
-ROLE 11-12
-FUNCTIONS 12
-14TH FINANCE COMMISSION 13
-15TH FINANCE COMMISSION 13
4. PLANNING COMMISSION 14-21
-HISTORY 14-15
-OBJECTIVES 15
-BASIC REQUIREMENTS FOR 15-16
PLANNING 16-17
-FUNCTIONS 17
-COMPOSITION 17
-ORGANIZATIONAL STRUCTURE 17-21
-INDIA’S 5YR PLANS
5. ANALYSING 21-22

6. CONCLUSION 23

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 ABSTRACT
India is a Union of States having federal system of finance. All sources of income and
expenditure stand distributed amongst the Union government, State government and local
governments, in the form of Central List, State List and concurrent List. The Constitution of
India provides for the appointment of finance commission after every five years, even though
new finance commission can earlier be appointed by the President of India. Thus, it is a
continuous process. Finance Commission generally presents its recommendations with regard
to allocation of revenue between the Centre and the States. On the other hand, Planning
Commission help in the formulation of the State Plans, tries to fit them, in an overall
perspective of the nationwide strategy of economic growth. For the smooth working of the
system some sort of co-ordination should exist between the Finance Commission and the
Planning Commission.

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 INTRODUCTION
The word commission has several very different meanings, but in its most basic meaning,
commission is the act of passing a responsibility to someone else. If you receive a
government commission, that means you have been assigned a task by the government.

Another common meaning of commission is the amount of money an employee earns when
they sell something: In addition to his salary, he gets a 1% commission on each sale. A
commission is also an order for someone to do something and get paid: The artist received a
commission for a new painting to hang in the building lobby. And a commission is a high-
ranking position in the armed forces, or a special committee that controls or investigates
something.

The First Finance Commission was constituted vide Presidential Order dated 22.11.1951
under the chairmanship of Shri K.C. Neogy on 6th April, 1952.  Fifteenth Finance
Commissions have been Constituted so far at intervals of every five years.1

The Finance Commission is constituted by the President under article 280 of the Constitution,
mainly to give its recommendations on distribution of tax revenues between the Union and
the States and amongst the States themselves. It is a body set up under Article 280 of the
Constitution. Its primary job is to recommend measures and methods on how revenues need
to be distributed between the Centre and states. The commission was set up to give
recommendations for devolution of taxes and other fiscal matters for five fiscal years,
commencing 1 April 2020. The main tasks of the commission were to "strengthen
cooperative federalism, improve the quality of public spending and help protect fiscal
stability". Some newspapers like The Hindu and The Economic Times noted that
commission's job was made harder because of the roll-out of goods and service tax (GST)
regime in India, as, it had taken certain powers concerning taxation away from the union and
the states, and, had given them to the newly formed GST Council. 2 The peer-reviewed
journal, Economic and Political Weekly, further noted that even after the passage of the
Fiscal Responsibility and Budget Management Act, 2003, some states still incur revenue
deficits, so, the commission would have to either recommend the disbandment of revenue
deficit grants, or, would have to recommend ways for further fiscal consolidation.

1
Economics and Governance Finance Commission https://www.toppr.com/guides/general-
awareness/economics-and-governance/finance-commission/
2
Goods and Services Tax https://www.gst.gov.in/

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Planning Commission, agency of the government of India established in 1950 to oversee the
country’s economic and social development, chiefly through the formulation of five-year
plans. The commission’s original mandate was to raise the standard of living of ordinary
Indians by efficiently exploiting the country’s material and human resources, boosting
production, and creating employment opportunities for all. It is today responsible for
periodically assessing the country’s resources; developing five-year plans, along with
strategies for implementing them; and monitoring the execution of the plans and
recommending adjustments of policy as outcomes warrant. The country’s first five-year plan
was launched in 1951.3

The commission is chaired by India’s prime minister and includes a deputy chairman and
several full-time members. Each of the numerous divisions of the commission, corresponding
to sectors of the national economy and society, is headed by a senior officer. The divisions
include education, health, infrastructure, science, financial resources, industry, social welfare,
rural development, and water resources.

3
Overview of Indian Economy Five Year Plans of India

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 FINANCE COMMISSION
The finance commission of India came into existence in 1951. It was established under
Article 280 of the Indian constitution by the president of India. It was formed to define the
financial relations between the centre and the state. The finance commission Act of 1951
states the terms of qualification appointment and disqualification and term, digibility and
powers of the finance commission.4 As per the constitution, the committee appointed every
five years and consists of a chairman and four others members. Since the institution of the
first finance commission, stack changes have occurred in the Indian economy causing
changes in the microeconomic scenario. This has led to major changes in the finance
commission recommendations over the years. Till date 14 finance commission have
submitted their reports.

HISTORY

The Indian states like all other federations is also ridden by the problems of vertical and
horizontal imbalances. Explaining vertical Imbalances result because states are assigned
responsibilities and in the process of fulfilling those that they incur expenditures
disproportionate to their sources of revenue, Dr. B.R. Ambedkar, the then law minister,
established the finance commission of India. This is because the states are able to gauge the
needs and concerns of their people more effectively and hence, are more efficient in
addressing them. Factors like historical backgrounds, differences in resources endowments
etc. lead to the widening horizontal imbalances. Thus, as he has enshrined in the constitution
of India, the recognition of these two problems Dr. Ambedkar has made several provisions to
bridge the gap of finance between the centre and the states. These 163 H I N D A R T S A C
AD E M Y Adv. Res. J. Soc. Sci., 7(1); June, 2016: includes various articles in the
constitution like article 268, which facilitates levy of duties by the centre but equips the state
to collect and retain the same. Similarly, there are article 269, 270, 275, 282 and 293 all of
which specify ways and means of sharing resources between union and states. Also Act 280
as a whole speak of finance commission.5

ARTICLE 280: FINANCE COMMISSION:

4
THE FINANCE COMMISSION (MISCELLANEOUS PROVISIONS) ACT, 1951 FEBRUARY 13, 2015
ADMINISTRATOR- Search within this website for Acts, Case Briefs, Legal FAQs, Law Schools, Law Events
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Finance-commission » Historical Perspective of Finance Commission India

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The constitution frames realised that a permanent or immutable formula would hardly meet
the situation for all time to come as changes in the socio-economic conditions in the country
would demand constant adjustment the basis of transfer of revenue from the centre to the
states. They, therefore, devised a flexible scheme for transfer of central revenue to the states,
a scheme adjustable in the light of experience, contemporary economic situation and financial
position of the centre and the states; and reviewable periodically and which should work
automatically without causing any intergovernmental friction. The objectives were achieved
by making provisions in the constitution for a periodic appointment of a finance commission
a non-political body and by leaving it the task of making inter-government financial
adjustment from time to time.

Article 280 (1) provides for the appointment by the president of a finance commission every
five years, or earlier, if he considers it necessary. The commission consists of a chairman and
four other members appointed by the President. 6

Article 280 (2) provides that parliament is empowered to determine by law the requisite
qualifications for appointment as members for the commission. 7

Article 280 (3) provides for the functions of the commission, are to make recommendations
to the President with regard to the following matters:

– The distribution between the union and the state of the net proceeds of the taxes
which are to be, or may be divided between them and the allocation of the respective
shows of such proceeds.

– The principles to govern the grants-in-aid of the revenues of the states out of the
consolidated fund of India.

– The measures needed to augment the state consolidated fund to supplement the
resource of the Panchayats in the state on the basis of the recommendations made by
the state finance commission.

– The measures needed to augment the state consolidated fund to supplement the
resources of the Municipalities in the state on the basis of the recommendations made
by the state finance commissions.

6
Central Government Act
Article 280(1) in The Constitution of India 1949
7
Central Government Act
Article 280(2) in The Constitution of India 1949

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 – Any other matter referred to it by the President in the interest of sound finance
Article 280 (4) provides that commission is to determine its procedure and is to have
such powers as parliament may by law confer on it. According to the finance
commission act, it has all the powers of a civil court of summoning the witness,
requiring production of any document, requiring any person to furnish information of
any point which the commission regards as useful or relevant to any matter under its
consideration. The finance commission can be characterised as the balance wheel of
the Indian Federal financial relationship between the centre and the states.8

FINANCE COMMISSION ACT 1951:

With the objective of giving a structured format to the finance commission of India and to
bring it at par with world standards. The finance commission (Miscellaneous Provision) Act,
1951, was passed. It lays down rules regarding qualification and disqualification of members
of the commission, their appointment, term digibility and powers.9

Qualification of the members:

Chairman of the finance commission is selected among people who have had the experience
of public affairs. The other four members are selected from people who:

– Are, or have been, or are qualified, as judge of High Court, or

– Have knowledge of government finances or accounts.

– Have had experience in administration and financial expertise, or,

– Have special knowledge of economics.

Procedures and powers of the commissions:

The commission has the power to determine their own procedures and:

– Has all powers of the civil court as per the court of civil procedure, 1908.

– Can summon and enforce the attendance of any witness or ask any person to deliver
information or produce a document, which it derives relevant.

8
Central Government Act
Article 280(3) in The Constitution of India 1949
9
The Finance Commission (Miscellaneous Provisions) Act,1951
FEBRUARY 13, 2015 ADMINISTRATOR

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 – Can ask for the production of any public record or document from any court or
office.

– Shall be deemed to be a civil court for purpose of sec. 480 and 482 of the code of
criminal procedure, 1898.

Disqualification from being a number of the commission:

A member may be disqualified if:

– He is mentally unsound.

– He is an un-discharged insolvent.

– He has been conducted of a moral offence.

– His financial and other interest are such that it hinders smooth functioning of the
commission.

Salaries and allowances of the members:

The members of commission shall provide full-time or part-time service to the commission,
as the president specified in his order. The members shall be paid salaries and allowances as
per the provisions made by the central government. So far, 13 finance commissions have
submitted their recommendation. More or less, all of them have been accepted by the union
government.

COMPOSITION OF FINANCE COMMISSION:

 The Constitution provides that Finance Commission shall consist of a Chairman and

four other members to be appointed by President. The Chairman or members are
eligible for reappointment.
 The Constitution authorizes Parliament to make provisions related to qualifications,
conditions of service of members or powers of Finance Commission. So, Parliament
enacted Finance Commission Act in 1951 to determine provisions related to
qualifications or disqualifications, conditions of service or miscellaneous powers to
perform functions provided under constitution.

ROLE:

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 The key role Finance Commission in India is to act as an instrument to divide proceeds of
divisible taxes between the states and the Union government or in cases of taxes that are
collected by the centre but the proceeds of which are allocated between the states, to
determine the principles of such allocation.
 The Finance Commission of India also determines the principles of governing the grants
in aids of the revenues of states out of the consolidated fund of India. It is an important
function of the Indian Finance Commission. The commission has the responsibility of
considering any matter referred to the commission by the President in the interest of
sound finance.
 The President under Article 280 lays the recommendations of the finance commission
before each House of the Parliament with an explanatory note as to the action to be taken
on the recommendations.
 The Finance Commission distributes of proceeds of Income-tax between the union and
the states. But taxes on the payments of the central government are attributable only to the
union territories.10

FUNCTIONS:

It shall be the duty of the Finance Commission to make recommendations to the President on

following matter:

 The distribution between the Union and the States of the net proceeds of taxes and the
allocation between the States of the respective shares of such net proceeds of taxes;
 The principles which should govern the grants in aid of the revenues of the States out of
the Consolidated Fund of India;11
 The measures needed to augment the Consolidated Fund of a State to supplement the
resources of the Municipalities and Panchayat in the State on the basis of the
recommendations made by the Finance Commission of the State.
Any other matters referred to commission by President in the interests of sound finance.
 The President shall cause every recommendation made by the Finance Commission under
the provisions of this Constitution together with an explanatory memorandum as to the
action taken thereon to be laid before each House of Parliament.

10
Finance Commission of India: Powers, Functions and Responsibilities- S E P T E M B E R 1 9 , 2 0 1 7
11
The Economic Times Tue, Jun 18, 2019
05.56PM IST

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14th FINANCE COMMISSION:
Major Recommendations of 14th Finance Commission headed by Prof. Y V Reddy
 The share of states in the net proceeds of the shareable Central taxes should be 42%. This
is 10 percentage points higher than the recommendation of 13th Finance Commission.
 Revenue deficit to be progressively reduced and eliminated.
 Fiscal deficit to be reduced to 3% of the GDP by 2017–18.
 A target of 62% of GDP for the combined debt of centre and states.
 The Medium-Term Fiscal Plan (MTFP) should be reformed and made the statement of
commitment rather than a statement of intent.
 FRBM Act needs to be amended to mention the nature of shocks which shall require
targets relaxation.
 Both centre and states should conclude 'Grand Bargain' to implement the model Goods
and Services Act (GST).
 Initiatives to reduce the number of Central Sponsored Schemes (CSS) and to restore the
predominance of formula-based plan grants.
 States need to address the problem of losses in the power sector in time bound manner.12

15TH FINANCE COMMISSION:

The Fifteenth Finance Commission was constituted by the Government of India, after the
approval from the President of India, through a notification in the Gazette of India in
November 2017. Nand Kishore Singh was appointed as the commission's chairman, with its
full-time members being Shaktikanta Das and Anoop Singh and its part-time members being
Ramesh Chand and Ashok Lahiri.
The commission was set up to give recommendations for five years commencing on 1 April
2020. The main tasks of the commission were to "strengthen cooperative federalism, improve
the quality of public spending and help protect fiscal stability". Some newspapers like The
Hindu and The Economic Times noted that commission's job was harder because of the
rollout of goods and service tax (GST), as, it had taken certain powers related to taxation
away from states and the Union and had given it to the GST Council.13

12
Fourteenth Finance Commission Report- PRS LEGISLATIVE RESEARCH
13
Press Information Bureau Government of India Finance Commission- 04-April-2019 15:46 IST
15th Finance Commission holds high level discussions on ‘Fiscal Relations across levels of Government’

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 PLANNING COMMISSION
The Planning Commission was an institution in the Government of India, which formulated
India's Five-Year Plans, among other functions.

In his first Independence Day speech in 2014, Prime Minister Narendra Modi announced his
intention to dissolve the Planning Commission. It has since been replaced by a new
institution named NITI Aayog.

HISTORY:
The Planning Commission was set up on the 15th of March, 1950 through a Cabinet
Resolution. Planning Commission had evolved over time from developing a highly
centralised planning system towards indicative planning where Planning Commission
concerns itself with the building of a long-term strategic vision of the future and decide on
priorities for the nation. It works out sectoral targets and provides promotional stimulus to the
economy (through its " plan fund allocations") to grow in the desired direction. Planning
Commission attempted to play a system change role and provided consultancy within the
Government for developing better systems. In order to spread the gains of experience more
widely, Planning Commission also played an information dissemination role.

Thus, historically, Planning Commission's work was three dimensional. (a) design policy
direction and suggest required schemes/ programmes; (b) influence the resource allocation
from budget; and (c) oversee the performance and record the same on a standard framework
for comparative assessment of all the states from time to time.14

In short, Planning Commission was doing the job both that of a think thank and the function
of allocation of plan resources among the Central Ministries and States in as judicious a
manner as possible, given the limitations of resources.

The announcement on setting of Planning Commission and its expected role in the economic
management was first made in the Parliament by the President, and the details were disclosed
by the Finance Minister (Shri John Mathai) through his budget speech in the first year of the
Republic (1950-51). Rightly, Planning Commission was anchored to India’s political history
of immediate past and the Directive Principles of State Policy as enunciated in the
Constitution of India.

14
 PLANNING COMMISION GOVERNMENT OF INDIA-November 05 2014 10:52:52.

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The background and context in which Planning Commission was set up had been outlined in
the Cabinet Resolution of 15th March 1950.

OBJECTIVES:

Objective of Planning in India:

 To increase National income and per capita income.

 To raise agricultural Production.
 To industrialise the country.
 To achieve balanced regional development.
 To expand employment opportunities.
 To reduce inequalities of income and wealth.
 To remove poverty.
 To achieve self-reliance.

Basic Requirements for Planning:

The basic requirements needed for planning process are:

(i) Statistical Data:

For the success of planning, reliable and adequate statistical data are required. This
helps in setting and achieving targets for future.

(ii) Economic Structure:

The country’s economic structure must be conducive to planned progress. It is the

responsibility of the State to bring structural changes in the society so that the plans
may be successful. Land Reforms, Community development programmes, etc., are to
be initiated and implemented by the Government.

(iii) Administration:

For the success of planning the country needs honest, sincere, dynamic, efficient and
experienced officials. The administrative set-up should be competent and adequate.
The constitution and Centre- State relations also play an important role in the
implementation of plans.

(iv) Institutions:

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 The combining resources and potentialities primarily through human resources in a
reasonable manner is called an institutional structure. For the success of planning
some institutional changes are required.

(v) Co-operation of People:

Co-operation of people is very essential for the success of plans. They should be
educated and enlightened regarding the value and benefits of various plans. The
participation of people in planning process leads to a great success.

FUNCTIONS:

The 1950 resolution setting up the Planning Commission outlined its functions as to:

 Make an assessment of the material, capital and human resources of the country,
including technical personnel, and investigate the possibilities of augmenting such of
these resources as are found to be deficient in relation to the nation’s requirement;
 Formulate a Plan for the most effective and balanced utilisation of country's resources;
 On a determination of priorities, define the stages in which the Plan should be carried out
and propose the allocation of resources for the due completion of each stage;
 Indicate the factors which are tending to retard economic development, and determine the
conditions which, in view of the current social and political situation, should be
established for the successful execution of the Plan;
 Determine the nature of the machinery which will be necessary for securing the
successful implementation of each stage of the Plan in all its aspects;15
 Appraise from time to time the progress achieved in the execution of each stage of the
Plan and recommend the adjustments of policy and measures that such appraisal may
show to be necessary; and
 Make such interim or ancillary recommendations as appear to it be to appropriate either
for facilitating the discharge of the duties assigned to it, or on a consideration of
prevailing economic conditions, current policies, measures and development programmes
or on an examination of such specific problems as may be referred to it for advice by
Central or State Governments.

15
The Planning Commission — Its Composition and Function American Planning Association

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Planning Commission was replaced with NITI Aayog on 1 January 2015. However, the
financial powers like setting sectoral priorities, designing the schemes and programmes,
estimating the entitlements to State development programmes (other than devolution), and
influencing the annual allocations as per the priorities etc. now come under direct influence
of the Ministry of Finance, Budget Division.

COMPOSITION:
The composition of the Planning Commission has been mentioned below:

 Prime Minister is the ex-officio Chairman of the commission. He presides over the
meetings of the commission.
 Deputy Chairman is the de-facto chairman of the commission. He is given the rank of a
Cabinet Minister. He is responsible to formulate and submit the draft Five Year Plan to
central cabinet.
 The Finance Minister and the Planning Minister are the ex-officio members of the
commission. In addition, some other central ministers may be appointed as part-time
members of the commission.
 The commission has four to seven full-time members who are experts in various fields
such as economics, industry, science and general administration. They enjoy the rank of a
Minister of State.
 The commission has a member-secretary who is usually a senior IAS officer.

ORGANIZATIONAL STRUCTURE:
According to the functions, the Planning Commission has three organs:

1. Technical Divisions

2. Housekeeping Branches

3. Programme Advisors

INDIA’S 5YR PLANS:

The concept of economic planning in India is derived from the Russia (then USSR). India has
launched 12 five-year plans so far. First five-year plan was launched in 1951. Now the

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present NDA government has stopped the formation of five-year plan. So 12th five-year plan
would be called the last five-year plan of India.

List of five-year plans of India:

The concept of economic planning in India is derived from the Russia (then USSR). India has
launched 12 five-year plans so far. First five-year plan was launched in 1951. Now the
present NDA government has stopped the formation of five-year plans. So 12th five-year plan
would be called the last five-year plan of India.

The decades-old Five-Year Plans will make way for a three-year action plan, which will be
part of a seven-year strategy paper and a 15-year vision document. The Niti Aayog, which
has replaced the Planning Commission, is launching a three-year action plan from April 1,
2017.16

1. First Five Year Plan:

I. It was made for the duration of 1951 to 1956.

II. It was based on the Harrod-Domar model.

III. Its main focus was on the agricultural development of the country.

IV. This plan was successful and achieved growth rate of 3.6% (more than its target)

2. Second Five Year Plan:

I. It was made for the duration of 1956 to 1961.

II. It was based on the P.C. Mahalanobis Model.

III. Its main focus was on the industrial development of the country.

IV. This plan was successful and achieved growth rate of 4.1%

3. Third Five Year Plan:

I. It was made for the duration of 1961 to 1966.

II. This plan is called ‘Gadgil Yojna’ also.

III. The main target of this plan was to make the economy independent and to reach self-
active position of take-off.

16
List of Five-Year Plans in India: History of Economic Planning- May 24, 2019, 18:00/Arpit Kumar Jain

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IV. Due to china war, this plan could not achieve its growth target of 5.6%

4. Plan Holiday:

I. The duration of plan holiday was from 1966 to 1969.

II. The main reason behind the plan holiday was the Indo-Pakistan war & failure of third
plan.

III. During this plan annual plans were made and equal priority was given to agriculture its
allied sectors and the industry sector.

5. Fourth Five Year Plan:

I. Its duration was from 1969 to 1974.

II. There were two main objectives of this plan i.e. growth with stability and progressive
achievement of self-reliance.

III. During this plan the slogan of “Garibi Hatao” is given during the 1971 elections by Indira
Gandhi.

IV. This plan failed and could achieve growth rate of 3.3% only against the target of 5.7%.

6. Fifth Five Year Plan:

I. Its duration was 1974 to 1979.

II. In this plan top priority was given to agriculture, next came to industry and mines.

III. Overall this plan was successful which achieved the growth of 4.8% against the target of
4.4%.

IV. The draft of this plan was prepared and launched by the D.P. Dhar. This plan was
terminated in 1978.

7. Rolling Plan: This plan was started with an annual plan for 1978-79 and as a continuation
of the terminated fifth year plan.

8. Sixth Five Year Plan:

I. Its duration was from 1980 to 1985.

II. The basic objective of this plan was poverty eradication and technological self-reliance.

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III. It was based on investment yojna, infrastructural changing and trend to growth model.

IV. Its growth target was 5.2% but it achieved 5.7%.

9. Seventh Five Year Plan:

I. Its duration was from 1985 to 1990.

II. Objectives of this plan include the establishment of the self-sufficient economy,
opportunities for productive employment.

III. For the first time the private sector got the priority over public sector.

IV. Its growth target was 5.0% but it achieved 6.0%.

Annual Plans: Eighth five Plan could not take place due to volatile political situation at the
centre. So, two annual programmes are formed in 1990-91& 1991-92.

10.  Eighth Five Year Plan:

I. Its duration was from 1992 to 1997.

II. In this plan the top priority was given to development of the human resources i.e.
employment, education, and public health.

III. Duing this plan Narasimha Rao Govt. launched New Economic Policy of India.

IV. This plan was successful and got annual growth rate of 6.8% against the target of 5.6%.

11. Ninth Five Year Plan:

I. Its duration was from 1997 to 2002.

II. The main focus of this plan was “growth with justice and equity”.

III. It was launched in the 50th year of independence of India.

IV. This plan failed to achieve the growth target of 7% and grow only at the rate of 5.6%.

12. Tenth Five Year Plan:

I. Its duration was from 2002 to 2007.

II. This plan aims to double the per capita income of India in the next 10 years.

III. It aims to reduce the poverty ratio 15% by 2012.

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IV.  Its growth target was 8.0% but it achieved only 7.2%.

13. Eleventh Five Year Plan:

I. Its duration was from 2007 to 2012.

II. It was prepared by the C. Rangarajan.

III. Its main theme was “faster and more inclusive growth”

IV. Its growth rate target was 8.1% but it achieved only 7.9%

14.  Twelfth Five Year Plan:

I. Its duration is from 2012 to 2017.

II. Its main theme is “Faster, More Inclusive and Sustainable Growth”.

III. Its growth rate target is 8%.

IV. It is the current five-year plan of India.

Three-year action plan is document only provides a broad roadmap to the government. The
document does not detail any schemes or allocations as it has no financial powers. Since it
need not be approved by the Union Cabinet, its recommendations are not binding on the
government.

ANALYSING:

Planning Commission was established as an advisory body but gradually, it became powerful
and emerged dominant in policy decisions of the government. Many critics have labelled it as
a Super Cabinet, a Parallel Cabinet, and an Economic Cabinet and so on. The presence of
Planning Commission had encroached upon the authority and functions of Finance
Commission as there was no clear boundary between roles and responsibilities of the two
bodies. It has also been criticized for encroaching upon federal system of the country.

The First Administrative Reforms Commission of India observed that the Planning
Commission has earned the reputation of being a parallel cabinet and sometimes, a Super
Cabinet. It suggested that the Planning Commission should not interfere in the
implementation of plan. In addition, D. R. Gadgil, the former deputy chairman of planning
commission concluded that the commission has failed as its recommendations are only
advisory and not binding. K. Santhanam, an eminent constitutional expert, criticized the

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Planning Commission of superseding the federal system of India. P.V. Rajamannar
highlighted the overlapping of roles and responsibilities of the Planning Commission and the
Finance Commission.

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 CONCLUSION

The constitution of India envisages the Finance commission as the balancing wheel of fiscal
federalism in India. However, its role in the centre state relation is weaken by the formation
of planning commission, a non-constitutional and non-statutory body.

Both policy and programme come under the purview of the planning commission and the
assistance to be given by the centre for projects on the recommendation of the planning
commission, it is obvious that the body like finance commission can’t operate in the same
field. The main function of the finance commission is now determining the revenue gap
between the centre and the states and provide ways for filling up these gaps.

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