14th Finance Commission submitted its report to President
14th Finance Commission headed by former RBI Governor YV Reddy submitted its report to the President of India.
The 14th Finance Commission headed by former RBI Governor YV Reddy submitted its report to the President of India on 15 December 2014. The report was submitted by A N Jha, Secretary of the Finance Commission to Omita Paul, Secretary to the President of India.
The panel has given its views on the devolution of tax receipts from the Centre to the States between 1 April 2015 and 31 March 2020.
Report submitted by the Commission will be a key input in the preparation of the Union Budget 2015-16.
About the 14th Finance Commission
The 14th Finance Commission was appointed on 2 January 2013 under the chairmanship of YV Reddy and was asked to submit its report by 31 October 2014. Further on 31 October 2014, the President of India issued order for extension of time for the 14th Finance Commission by two months (till 31 December 2014).
President issued an order extending the term of the commission after it sought an extension of two months for submission of its report to examine financial projections and carry out consultations with the Andhra Pradesh and Telangana governments in view of the additional term of reference made to it on 2 June 2014.
The panel was also asked to look into the Goods and Services Tax.
Terms of Reference of 14th Finance Commission
• The resources of the Central Government, for five years commencing on 1 April 2015, on the basis of levels of taxation and non-tax revenues likely to be reached during 2014-2015
• The demands on the resources of the Central Government, in particular, on account of the expenditure on civil administration, defence, internal and border security, debt-servicing and other committed expenditure and liabilities
• The resources of the State Governments and the demands on such resources under different heads, including the impact of debt levels on resource availability in debt stressed states, for the five years commencing on 1 April 2015, on the basis of levels of taxation and non-tax revenues likely to be reached during 2014-15
• The objective of not only balancing the receipts and expenditure on revenue account of all the States and the Union, but also generating surpluses for capital investment
• The taxation efforts of the Central Government and each State Government and the potential for additional resource mobilisation to improve the tax Gross Domestic Product ratio in the case of Union and tax-Gross State Domestic Product ratio in the case of the States
• The level of subsidies that is required, having regard to the need for sustainable and inclusive growth, and equitable sharing of subsidies between the Central Government and State Governments
• The expenditure on the non-salary component of maintenance and upkeep of capital assets and the non-wage related maintenance expenditure on plan schemes to be completed by 31st March, 2015 and the norms on the basis of which specific amounts are recommended for the maintenance of the capital assets and the manner of monitoring such expenditure
• The need for insulating the pricing of public utility services like drinking water, irrigation, power and public transport from policy fluctuations through statutory provisions
• The need for making the public sector enterprises competitive and market oriented; listing and disinvestment; and relinquishing of non-priority enterprises
• The need to balance management of ecology, environment and climate change consistent with sustainable economic development
• The impact of the proposed Goods and Services Tax on the finances of Centre and States and the mechanism for compensation in case of any revenue loss.
The Finance Commission of India is constituted by the President under Article 280 of the Constitution of India. The commission is constituted to define the financial relations between the centre and the state.
As per the Constitution, the commission is appointed every five years and consists of a chairman and four other members.
• 1st Finance Commission of India constituted in 1951 was chaired by K.C. Neogy. Its plan was operational during 1952–57.
• 13th Finance Commission constituted in 2007 was chaired by Dr. Vijay L. Kelkar, Former Union Finance Secretary and Adviser to the Finance Minister. Its plan was operational during 2010–2015.