At the first instance, the work being done by the Planning Commission would receive a constitutional sanction, and more importantly the exercise would do away with the artificial distinction of plan and non-plan grants-in-aid. Also at the same time, Finance Commission would attain the status of a permanent body, necessary for discharging constitutional obligations in a dynamic situation.

These observations were made by Finance Commission member NC Jain in a note to the report of the EFC.

Jain also suggested that after merging Planning Commission with the Finance Commission, the membership of the later, as envisaged under Article 280 of the Constitution, might be raised to six.

The finance commission like Planning Commission could be reconstituted after every five years or prior to it if exigencies of circumstances so desired, suggested Jain.

The finance commission, he felt, should be entitled to recommend the grants-in-aid of revenue to the states, both on plan and non-plan side. However, for the study purposes the Commission may have two separate cells.

Jain argued that it was improper to give the Finance Commission a short tenure of one and half to two years for delineating certain fixed principles for five years in advance. He added that forecasts of the Commission, as gathered from states' or the Union's representatives might get get substantially disturbed during the course of five years.

He stressed, "the constitutional provisions have been made to solve practical problems and not illusions or hypothetical and astrological calculations". He added that for a long time the finance commission had been dwindling between `gap filling' approach and `normative' approach. For the real benefit to the states, a realistic approach was needed to be adopted by the Commission. "This can only be ascertained every year and not estimated futuristically for a period of five years," he added.

He recalled that even the 10th Finance Commission felt the absence of continuity and advance preparation. He said that advance preparation should be made by the Commission and not the Finance Commission Division or a Cell in the finance ministry.

He said that the true interpretation of the constitutional provisions would point to the Finance Commission as a live body for all the five years, though after every five year, a change might be made in personnel. He felt that any other interpretation given to the constitutional provision would militate against its letter and spirit.

Referring to the Planning Commission, he said that the founding fathers had not contemplated the existence of Planning Commission at the time of drafting and passing of the constitution. Though the Planning Commission was set up under an executive resolution, it has become a permanent body.

Contrary to the provisions of the constitution, Planning Commission started dealing with devolution of huge funds for investment of a capital nature, he added.

According to Jain the very concept of bifurcating grants-in-aid into `plan' and `non-plan' was a distortion and digression. He added that Article 275 speaks of grants-in-aid as a complete entity without its sub-categorisation as plan and non-plan grants.

Jain stressed that ouster of jurisdication of the Finance Commission from considering the plan grants, both revenue and capital, was not warranted under the constitution, but the system has remained prevalent for nearly half a century.