2.7. State Finance Commission

♤ According to the act, the State government is also required to appoint a State Finance Commission once in five years. This Commission would examine the financial position of the local governments in the State.

♤ It would also review the distribution of revenues between the State and local governments on the one hand and between rural and urban local governments on the other.

♤ This innovation ensures that allocation of funds to the rural local governments will no more be dictated by political consideration.