Article 281 forms a critical procedural link in the functioning of fiscal federalism in India, as outlined in the Constitution. It mandates the steps that must be taken by the executive after the submission of the recommendations made by the Finance Commission, ensuring that these crucial proposals regarding the distribution of financial resources are brought into the public domain and before the legislative body for scrutiny. This article underscores the importance of transparency and accountability in the implementation process of the Finance Commission’s recommendations.
Original Text
Every recommendation made by the Finance Commission under the provisions of this Constitution together with an explanatory memorandum as to the action taken thereon shall be laid before each House of Parliament.
Detailed Explanation
Article 281 places a mandatory duty on the President of India regarding the report submitted by the Finance Commission, which is constituted under Article 280 of the Constitution. Upon receiving the Finance Commission’s report, which contains its recommendations primarily concerning the distribution of net proceeds of taxes between the Union and the States, the principles governing grants-in-aid to the States, and measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities, the President must ensure a specific action is taken.
The article stipulates that “Every recommendation” made by the Commission must be laid before Parliament. This implies the entirety of the report and its suggestions. Furthermore, it is crucial that the report is accompanied by an “explanatory memorandum as to the action taken thereon”. This memorandum is a key component. It is prepared by the Union Government and details the decisions taken by the government concerning the Finance Commission’s recommendations. It indicates which recommendations the government has accepted, which it has rejected, and which it has accepted with modifications, along with the reasons for such actions.
This combined presentation – the Finance Commission’s report and the government’s explanatory memorandum – must be laid before “each House of Parliament”, meaning both the Lok Sabha (House of the People) and the Rajya Sabha (Council of States). This step is fundamental for ensuring legislative oversight. It allows Members of Parliament to examine the Commission’s expert advice and the government’s response to it, facilitating debate and scrutiny on matters of fiscal policy and inter-governmental financial relations. While the Finance Commission’s recommendations are not binding on the government, the constitutional requirement to lay them before Parliament along with the action taken memorandum provides a platform for public and legislative discussion, thereby influencing the government’s decisions and fostering accountability.
Detailed Notes
- Article 281 falls under Part XII of the Indian Constitution (Finance, Property, Contracts and Suits).
- It deals with the procedure following the submission of the Finance Commission’s report.
- It imposes a constitutional duty on the President of India.
- The President is required to lay the report of the Finance Commission before Parliament.
- The report must be laid before each House of Parliament, i.e., the Lok Sabha and the Rajya Sabha.
- The Finance Commission’s report must be accompanied by an “explanatory memorandum”.
- This memorandum is prepared by the Union Government.
- It details the “action taken” by the government on the recommendations made by the Finance Commission.
- The memorandum indicates which recommendations have been accepted, rejected, or modified, and provides reasons.
- This entire process ensures transparency regarding the government’s response to the commission’s advice.
- It facilitates parliamentary oversight and allows for debate and scrutiny of fiscal federalism issues and the government’s financial policies.
- It completes the constitutional cycle initiated by the constitution of the Finance Commission under Article 280.
- While recommendations are advisory, this article ensures they are not ignored and are subject to public and legislative review.
Additional Comments
- The explanatory memorandum is crucial as it reveals the extent to which the Union government intends to implement the Finance Commission’s recommendations, which are often seen as impartial, expert advice on complex fiscal matters.
- Laying the documents before Parliament provides an opportunity for states (indirectly represented through the Rajya Sabha) to understand the Union government’s position on recommendations affecting them.
- This process enhances accountability by requiring the executive to justify its decisions regarding the acceptance or rejection of the commission’s recommendations before the legislature.
- The tabling of the report and memorandum typically occurs during one of the parliamentary sessions, often the budget session.
Summary
Article 281 of the Indian Constitution mandates the President to present the report of the Finance Commission to both the Lok Sabha and the Rajya Sabha. This presentation must include an explanatory memorandum detailing the action taken by the Union government on the commission’s recommendations. This constitutional requirement ensures transparency and enables parliamentary scrutiny of the government’s response to the expert advice provided by the Finance Commission on fiscal matters, particularly concerning the distribution of finances between the Union and the States.