Article 281 of CoI : Article 281: Recommendations of the Finance Commission.

Explanation using Example

Example 1:

Scenario: The Finance Commission recommends increasing the share of tax revenue allocated to a particular state due to its increased expenditure on healthcare.

Explanation: The Finance Commission submits its recommendation to the President, suggesting that the state of Maharashtra should receive a higher percentage of the central tax revenue to support its healthcare initiatives. The President then prepares an explanatory memorandum detailing the recommendation and the actions taken based on it. This document is presented to both the Lok Sabha and the Rajya Sabha for their review and discussion.

Example 2:

Scenario: The Finance Commission advises on grants-in-aid to states facing natural disasters.

Explanation: After a severe flood in Assam, the Finance Commission recommends a special grant to assist the state in its recovery efforts. The President receives this recommendation and includes it in an explanatory memorandum, which outlines the proposed grant and the rationale behind it. This memorandum, along with the recommendation, is then laid before both Houses of Parliament, ensuring transparency and allowing for parliamentary scrutiny and debate.