Part XII: Finance, Property, Contracts and Suits

Article 264: Interpretation

Original Article:

In this Part, "Finance Commission" means a Finance Commission constituted under article 280.

Explanations:

Article 264 sets the foundation for India’s fiscal framework by defining the term "Finance Commission" under Part XII. This article emphasizes the constitutional basis for establishing the Finance Commission, which is central to the allocation of resources between the Union and the States. The streamlined focus of this article reflects its evolution in response to administrative needs.

Legislative History:

Originally, Article 264 contained more extensive provisions regarding finance. However, the Constitution (Seventh Amendment) Act, 1956, replaced these with a concise reference to the Finance Commission, emphasizing its role as defined in Article 280.

Real-Life Examples:

• The 15th Finance Commission was established to recommend resource allocation based on Article 264’s definition, ensuring fiscal equity across states.
• Allocations for backward regions like Bundelkhand highlight the Finance Commission’s role in achieving financial balance.

Historical Significance:

The inclusion of Article 264 in the Constitution was pivotal in ensuring a structured approach to fiscal federalism. The Finance Commission, as defined by this article, was envisioned to act as a balancing mechanism in India's federal structure. By addressing resource disparities, the article underscores the framers’ commitment to equitable growth across all states and union territories.

Through the Seventh Amendment, the streamlined definition reflected the evolving administrative priorities of a rapidly developing nation. This amendment was essential for adapting to India's needs post-independence and fostering cooperative federalism in an era of significant economic transformation.

Debates and Deliberations:

The Constituent Assembly extensively discussed the role of the Finance Commission. Key debates included:

• Dr. B.R. Ambedkar: Emphasized the Finance Commission's role in maintaining fiscal federalism and promoting equitable resource distribution.
• K.T. Shah: Highlighted the need for transparency in the allocation process to prevent regional disparities.
• H.V. Kamath: Questioned the extent of the Commission's powers and its independence from the Union Government.

References:

• Constitution of India, Article 280: Establishment and functions of the Finance Commission.
• The Seventh Amendment Act, 1956: Key changes impacting Article 264.
• Reports of various Finance Commissions: Insights into their role in resource allocation.
• Constituent Assembly Debates, Volumes 7 and 8: Discussions on fiscal federalism.