THE PLAIN-LANGUAGE GUIDE
What does this mean?
A State Finance Commission reviews panchayat finances at the specified intervals and recommends revenue-sharing and support arrangements. The Governor lays its recommendations and an action memorandum before the legislature.
The constitutional framework for rural panchayats, elections, representation, finances and planning.
Why is this provision here?
Devolved responsibilities require a framework for reviewing and recommending local-government financial resources.
Historical evidenceArticle 243I was introduced in its present subject framework by Amendment 73 (1992), after the original Constitution. The verified sources are the official edition and the linked Amendment Act and Bill statement. Original 1946–1950 Assembly debates predate this insertion and are not presented as its direct drafting reason. The explanation of function above is editorial; the Bill statement supplies the attributed legislative reasons for the later proposal.
The explanation of purpose is an editorial reading of the provision. A drafting motive is attributed only where a linked historical source supports it.
Limits, exceptions & reading carefully
Educational summary of the linked source text. Exceptions, provisos, implementing laws and applicable judgments must be read before applying it to a real case.
Read the official constitutional text
243I. Constitution of Finance Commission to review financial
position.—(1) The Governor of a State shall, as soon as may be within one year
from the commencement of the Constitution (Seventy-third Amendment) Act,
1992, and thereafter at the expiration of every fifth year, constitute a Finance
Commission to review the financial position of the Panchayats and to make
recommendations to the Governor as to—
(a) the principles which should govern—
(i) the distribution between the State and the Panchayats of the
net proceeds of the taxes, duties, tolls and fees leviable by the State,
which may be divided between them under this Part and the
allocation between the Panchayats at all levels of their respective
shares of such proceeds;
(ii) the determination of the taxes, duties, tolls and fees which
may be assigned to, or appropriated by, the Panchayats;
(iii) the grants-in-aid to the Panchayats from the Consolidated
Fund of the State;
(b) the measures needed to improve the financial position of the
Panchayats;
(c) any other matter referred to the Finance Commission by the
Governor in the interests of sound finance of the Panchayats.
(2) The Legislature of a State may, by law, provide for the composition of
the Commission, the qualifications which shall be requisite for appointment as
members thereof and the manner in which they shall be selected.
(3) The Commission shall determine their procedure and shall have such
powers in the performance of their functions as the Legislature of the State may,
by law, confer on them.
(4) The Governor shall cause every recommendation made by the
Commission under this article together with an explanatory memorandum as to
the action taken thereon to be laid before the Legislature of the State.
Extracted from the Legislative Department’s May 2026 edition. Page footnotes may refer to neighbouring provisions; check their markers in the PDF. Inclusion in this edition does not by itself establish commencement or judicial effect.
