BPSC 71st CCE Prelims General Studies · Question 64 of 150

Correct — C, Parliament by act. The stem is lifted almost word for word from the clause that answers it. Article 280(2) reads: "Parliament may by law determine the qualifications which shall be requisite for appointment as members of the Commission and the manner in which they shall be selected." The phrase "which shall be requisite" in the question is the constitutional phrase, and it belongs to Parliament's clause, not the President's. Parliament in fact exercised that power at the earliest opportunity, through the Finance Commission (Miscellaneous Provisions) Act, 1951. Section 3 of that Act is the qualification list still in force: the Chairman is chosen from persons who have had experience in public affairs, and the four other members from persons who are, have been or are qualified to be appointed as a Judge of a High Court, or have special knowledge of the finances and accounts of Government, or have had wide experience in financial matters and in administration, or have special knowledge of economics. Article 280 is deliberately split between two authorities and the question is built on that split. Clause (1) is the President's: he constitutes the Commission by order, within two years of the Constitution's commencement and thereafter at the expiration of every fifth year or at such earlier time as he considers necessary, and he appoints the Chairman and the four other members. Clause (2) is Parliament's: it fixes who is eligible to be appointed and how they are to be selected. Clause (4) is Parliament's again — the Commission determines its own procedure but has such powers in the performance of its functions as Parliament may by law confer, and the 1951 Act supplies them, including the powers of a civil court to summon witnesses and require the production of documents. So the President appoints; Parliament sets the bar the appointee must clear. On the date of this exam, 13 September 2025, the body concerned was the Sixteenth Finance Commission, constituted on 31 December 2023 under Arvind Panagariya for the award period 2026–31, its members appointed by the President and qualified under a statute enacted seventy-four years earlier.

• (a)President of India — The strongest wrong answer, because the President really does hold most of the visible powers here: he constitutes the Commission by order under Article 280(1), decides whether to do so earlier than the five-year point, appoints the Chairman and all four members, refers additional terms under Article 280(3)(d) in the interests of sound finance, and lays every recommendation with an action-taken memorandum before each House under Article 281. What he does not do is prescribe the qualifications, because clause (2) hands that to Parliament. The generalisation that traps candidates comes from elsewhere in the Constitution — Article 318 does let the President determine, by regulation, the number of members of the Union Public Service Commission and their conditions of service. Read the specific Article rather than the pattern.
• (b)Council of Ministers — The Council of Ministers has no independent constitutional role in Article 280 at all. Under Article 74(1) it aids and advises the President, and in practice its advice is what moves him to constitute a Commission and to settle its terms of reference — but advice is not law. Clause (2) requires a determination "by law", which means a Bill passed by both Houses and assented to under Article 111. An executive body cannot supply that however senior it is, and a candidate who marks (b) has confused the source of the political decision with the source of the legal power.
• (d)Union Cabinet — The Cabinet does in practice decide when a Finance Commission is set up, who is proposed to chair it and what extra questions are referred to it — which is exactly why the option is offered. But a Cabinet decision is an executive act, not an enactment, and it cannot satisfy a clause that says "Parliament may by law determine". It is worth remembering how thin the Cabinet's own constitutional footing is: the word "Cabinet" appears in the Constitution only in Article 352(3), inserted by the Forty-fourth Amendment, 1978, which requires the written recommendation of the Union Cabinet before a Proclamation of Emergency is issued.

The Finance Commission is the constitutional balancing wheel of Indian fiscal federalism, created by Article 280 in the Finance chapter of Part XII. The design problem it solves is structural: the Union collects the most buoyant taxes while the States carry the heaviest expenditure responsibilities, so a neutral body has to periodically recommend how the money moves. Article 280 allots its four clauses to different authorities. Clause (1) empowers the President to constitute the Commission by order — within two years of commencement and thereafter every fifth year or earlier if he considers it necessary — consisting of a Chairman and four other members appointed by him. Clause (2) empowers Parliament, by law, to determine the qualifications for appointment and the manner of selection. Clause (3) sets out the duties: to recommend the distribution between the Union and the States of the net proceeds of divisible taxes and the allocation of the States' shares among themselves; the principles governing grants-in-aid to the States out of the Consolidated Fund of India; the measures needed to augment a State's Consolidated Fund to supplement the resources of its Panchayats and Municipalities — clauses (3)(bb) and (3)(c), inserted by the Seventy-third and Seventy-fourth Amendments of 1992 — and any other matter referred by the President in the interests of sound finance. Clause (4) lets the Commission determine its own procedure while giving Parliament the power to confer powers on it. Article 281 completes the accountability loop by requiring the President to lay every recommendation, with an explanatory memorandum on the action taken, before each House. The recommendations themselves are advisory, not binding; only the laying is compulsory. Exactly the same architecture is repeated one tier down: Article 243-I has the Governor constitute a State Finance Commission for the Panchayats, and Article 243-I(2) has the State Legislature by law provide for its composition, the qualifications of its members and the manner of their selection.

Notice first what kind of options you have been given. The President, the Council of Ministers and the Union Cabinet are the same institution wearing three hats — the formal head, the constitutional advisory body and its inner core. A properly set question cannot have three nearly interchangeable answers, so the odd one out is almost certainly the key. That structural read gets you to (c) before you have recalled a single Article, and the move transfers to any paper that offers you a cluster of near-synonymous executive bodies. Then confirm it from the wording. The stem's phrase "qualification which shall be requisite" is not a paraphrase; it is the language of Article 280(2), and the clause that carries those words begins "Parliament may by law determine". Whenever a stem echoes "shall be requisite", "shall be determined by Parliament by law" or "subject to any law made by Parliament", the answer is the legislature even where the appointment itself is the President's — the same split governs the salary and conditions of service of the Comptroller and Auditor-General under Article 148(3). The single discriminating fact here, then, is that Article 280 divides one office between two authorities: the President appoints under clause (1), Parliament sets the eligibility bar under clause (2). Miss the division and (a) looks unanswerable, because everything else visible about a Finance Commission — its constitution, its appointments, its terms of reference, the laying of its report — really is the President's doing.

• Article 280(1): the President shall, within two years of the commencement of the Constitution and thereafter at the expiration of every fifth year or at such earlier time as he considers necessary, by order constitute a Finance Commission consisting of a Chairman and four other members appointed by him.
• Article 280(2): Parliament may by law determine the qualifications requisite for appointment as members and the manner of their selection — the power was exercised through the Finance Commission (Miscellaneous Provisions) Act, 1951, whose section 3 requires the Chairman to have experience in public affairs and the four members to be qualified as a High Court judge, or to have special knowledge of Government finances and accounts, wide experience in financial matters and administration, or special knowledge of economics.
• Article 280(3) duties: distribution of the net proceeds of divisible taxes between the Union and the States and among the States; principles governing grants-in-aid from the Consolidated Fund of India; measures to augment a State's Consolidated Fund to supplement the resources of Panchayats and Municipalities — sub-clauses (bb) and (c), inserted by the Seventy-third and Seventy-fourth Amendments, 1992; and any other matter referred by the President in the interests of sound finance.
• Article 280(4) leaves the Commission to determine its own procedure while allowing Parliament to confer powers on it; Article 281 requires the President to lay every recommendation, with an action-taken memorandum, before each House. The recommendations are advisory — only the laying is mandatory.
• As of the 13 September 2025 exam: the Fifteenth Finance Commission under N. K. Singh had recommended 41% vertical devolution of the divisible pool to the States for 2021–26, against the Fourteenth Commission's 42%, and the Sixteenth Finance Commission had been constituted on 31 December 2023 under Arvind Panagariya for the award period 2026–31. The State-level parallel is Article 243-I: the Governor constitutes the State Finance Commission and the State Legislature by law fixes its composition and qualifications.

• Assuming the President fixes the qualifications because he makes the appointments — clause (1) and clause (2) of Article 280 are different powers vested in different authorities
• Generalising from Article 318, where the President genuinely does determine by regulation the number and conditions of service of UPSC members
• Confusing the Union Finance Commission under Article 280 with the State Finance Commission under Article 243-I, which the Governor constitutes and the State Legislature regulates
• Forgetting that the Commission's recommendations are advisory; the only mandatory step is the laying before each House under Article 281
• Treating a Cabinet decision as capable of satisfying a clause that requires a determination 'by law'

BPSC asks it as a bare 'who determines' one-liner and then stacks the option list with three faces of the executive, so the mark turns on noticing that only one option is a legislature — a category read, not a recall. UPSC works the same Article but from the duties side, asking what the Commission may and may not do, or who must lay its report before the House, and it prefers a multi-statement frame that forces you to reject plausible-sounding functions such as authorising withdrawals from the Consolidated Fund. Learn Article 280 clause by clause and both styles are covered; learn it as 'the President's body' and you will fail whichever one you meet.

• practice — not a real PYQ

  Under the Finance Commission (Miscellaneous Provisions) Act, 1951, the Chairman of the Finance Commission is selected from among persons who

  • (a)have had experience in public affairs
  • (b)have special knowledge of economics
  • (c)are or have been Judges of the Supreme Court
  • (d)have wide experience in financial matters and in administration

  Answer(a) have had experience in public affairs — options (b) and (d) are qualifications prescribed for the four other members, not the Chairman, and the judicial qualification for a member is High Court, not Supreme Court.

• practice — not a real PYQ

  Which of the following sub-clauses of Article 280(3) were inserted by the Seventy-third and Seventy-fourth Constitutional Amendment Acts, 1992?

  • (a)The distribution of the net proceeds of taxes between the Union and the States
  • (b)The principles governing grants-in-aid to the States
  • (c)Measures to augment a State's Consolidated Fund to supplement the resources of Panchayats and Municipalities
  • (d)Any other matter referred by the President in the interests of sound finance

  Answer(c) Measures to augment a State's Consolidated Fund to supplement the resources of Panchayats and Municipalities — sub-clauses (bb) and (c), added when the 73rd and 74th Amendments created the constitutional local-government tier in 1992. The other three duties were in Article 280 from the start.