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State Finance Commission
Constitutional Mandate
Article 243-I of the Constitution mandates that the Governor of each state constitute a State Finance Commission within one year of the 73rd Amendment's commencement (i.e., by April 1994) and thereafter at the expiration of every fifth year. The SFC reviews and makes recommendations on:
- Distribution of net proceeds of taxes, duties, tolls, and fees between the state and Panchayats
- Determination of taxes, duties, tolls, and fees that may be assigned to or appropriated by Panchayats
- Grants-in-aid to Panchayats from the Consolidated Fund of the State
- Measures needed to improve the financial position of Panchayats
The SFC report is laid before the State Legislature (Article 243-I(4)).
Rajasthan's State Finance Commissions
| SFC | Year Constituted | Chairman | Key Recommendations Period |
|---|---|---|---|
| 1st SFC | 1994 | B.B. Tandon | 1995-2000 |
| 2nd SFC | 2000 | Hiralal Devpura | 2000-2005 |
| 3rd SFC | 2005 | D.C. Samant | 2005-2010 |
| 4th SFC | 2010 | Mangi Lal Sharma | 2010-2015 |
| 5th SFC | 2015 | I.D. Bhatnagar | 2015-2020 |
| 6th SFC | 2020-21 (ongoing) | — | 2020-2025 |
Source: Panchayati Raj Department, Government of Rajasthan
6th SFC — Performance Data (2024-25)
The 6th State Finance Commission devolution in 2024-25:
- Budget allocation: ₹4,000 crore
- Transferred to PRIs: ₹621.07 crore (up to reporting period)
- Expenditure by PRIs: ₹1,886.13 crore (includes opening balance + transfers)
- Works completed: 37,394
Fund distribution among tiers (standard ratio applied by Rajasthan):
- Gram Panchayat: 75% of devolved funds
- Panchayat Samiti: 20%
- Zila Parishad: 5%
This weighted distribution toward Gram Panchayats (75%) reflects the constitutional intent to strengthen grassroots governance. The Gram Panchayat tier directly touches the maximum number of citizens and implements the largest share of rural development works.
Source: Rajasthan Economic Review 2025-26, Chapter 3
15th Finance Commission (Central) Grants
Separate from the SFC, the 15th Finance Commission (of the Union Government) also allocates grants directly to PRIs. For 2024-25:
- Budget: ₹4,100 crore
- Transferred: ₹2,203.29 crore
- Expenditure: ₹2,204.24 crore
- Works completed: 42,028
The 15th Finance Commission (Chairman: N.K. Singh, covering 2021-22 to 2025-26) divided grants into Tied Grants (for sanitation and drinking water — 60%) and Untied Grants (flexible use — 40%). This distinction is important for exam purposes: tied grants cannot be diverted to other uses.
Source: Rajasthan Economic Review 2025-26, Chapter 3