Union Government on 2 January 2013 constituted the 14th Finance Commission under former Reserve Bank of India (RBI) governor Yaga Venugopal Reddy.
The commission under YV Reddy is going to primarily review finances of the governments keeping in mind the fiscal consolidation road map that was laid out by his predecessor Vijay Kelkar, the head of 13th finance Commission.
The Commission would have three full-time members-
• Sushma Nath, Former Finance Secretary
• M. Govind Rao ,Director, NIPFP and
• Sudipto Mundle Former Acting Chairman of National Statistical.
The Commission would also have Abhijit Sen , the Member of Planning Commission as its part-time member. Also, Ajay Narayan Jha had been appointed Secretary to the Commission.
The commission has to give its report by October next year and the recommendations will come into effect from April, 2015 for a five-year period.
About Finance Commission
The Finannce commission is set up every five years. Article 280 of the Constitution provides for setting up of a finance commission to recommend how net earnings of taxes are to be divided between the Union and states and subsequently among the states.
The Finance Commission Act of 1951 states the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.
Functions 14th Finance Commission will Perform
• Among the new areas of recommendations on public sector units (PSUs), the commission will suggest how to list these units on the bourses and will also give its prescriptions on the disinvestment process.
• The commission has also been asked to recommend how non-priority PSUs be relinquished.
• The commission will recommend measures for segregating the pricing of public utility services such as drinking water, irrigation, power and public transport from policy fluctuations through statutory provisions.
• It will also suggest measures for maintaining a stable and sustainable fiscal environment consistent with equitable growth including suggestions to amend the Fiscal Responsibility Budget Management Act.