Union Cabinet extends term of 15th Finance Commission till October 2020
The 15th Finance Commission is expected to submit its interim report by November 30, 2019.
The Union Cabinet has approved the extension of the term of the 15th Finance Commission till October 30, 2020. The cabinet chaired by PM Narendra Modi also gave its approval to the finance commission to submit the first report for the fiscal year 2020-21.
The term of the 15th Finance Commission has been extended till October 2020 to enable the presentation of the final report covering the fiscal year 2021-22 to 2025-26.
The term extension will enable the commission to examine all comparable estimates for financial projections in the view of new reforms to finalise its recommendations from the period starting from 2020 to 2026.
The implementation of the model code of conduct had delayed the working of the commission, as it was able to complete its visit to states only recently. This, as a result, impacted its detailed assessments on the requirements of different states.
Why has the finance commission’s term been extended?
The term of the finance commission has been extended as the terms of reference for the commission are wide-ranging in nature and comprehensively examining their implications and aligning them to the requirements of the state and central requires additional time.
How will the term extension of the finance commission help the governments?
The finance commission’s term extension and increase in its coverage period will assist the central and state government in medium-term resource planning. Further, the approval to the finance commission to make its recommendations for the five-year period beyond April 1, 2021 will help the state governments and the centre to design schemes with medium to long term financial perspective and also provide adequate time for mid-course evaluation and correction.
The 15th Finance Commission is expected to submit its interim report by November 30, 2019. The interim report is expected to suggest formulae for tax devolution for the fiscal year 2020-21.
The validity of the previous formulae will end on March 31, 2020 and the finance commission would require additional time to submit the final report due to change in the statehood of J&K.
The impact of the economic reforms initiated in the current fiscal year is expected to be manifested in the data by the end of the first quarter of 2020-21.
• The Union Government set up the 15th Finance Commission under the chairmanship of NK Singh on November 27, 2017.
• 15th Finance Commission members:
Chairman: NK Singh
Secretary: Arvind Mehta
Full-time members: Shaktikanta Das, Anoop Singh
Part-time members: Ramesh Chand, Ashok Lahiri
• The 15th finance commission was set up to give its recommendations for five fiscal years beginning from April 1, 2020.
• The main objective behind setting up of the commission was to protect fiscal stability, improve the quality of public spending and strengthen cooperative federalism.
• The Finance Commission set up a 6-member Advisory Council in May 2018 to advise and assist it on the matters related to its terms of reference.