On 16 November 2020, the Chairman and Members of the 15th Finance Commission presented a copy of the Commission's report for the period 2021-22 to 2025-26, to Prime Minister Modi. The Commission will present its report to the Union Finance Minister Nirmala Sitharaman today.
The Report will be placed on the Table of the House along with Explanatory Memorandum by way of ATR as prescribed under the Constitution of India.
On 9 November 2020, the Fifteenth Finance Commission (XV-FC) led by Chairman N. K. Singh submitted its report for the period 2021-22 to 2025-26 to President Ram Nath Kovind. As per the Terms of Reference (ToR), the Commission was mandated to give its recommendations for five years, i.e., 2021-22 to 2025-26.
In 2019, the Commission submitted its interim report containing the recommendations for the Fiscal Year 2020-21, stressing that it was difficult to make projections for five years when the economy is slowing down after structural reforms like Goods and Services Tax (GST) and the insolvency code.
This report reduced the State's share in the divisible pool of taxes from 42% to 41% for the current year, after the dissolution of Jammu and Kashmir as a State. The report was accepted by the Union Government and was tabled in the Parliament on January 30, 2020.
Key Highlights:
1- The cover of this year's report reads: 'Finance Commission in Covid Times' and the scales are used to represent the balance between the States and the Union.
2- The report is divided into four volumes.
3- After the report is tabled in the Parliament, it will be available in the public domain.
4- The Commission’s chairman N.K. Singh and Secretary Arvind Mehta were accompanied by members Ajay Narayan Jha, Anoop Singh, Dr. Ashok Lahiri and Dr. Ramesh Chand for the submission of the report to the President.
Which issues are addressed in the report?
The Commission submitted its report on vertical and horizontal tax devolution, local government grants, disaster management grant, incentives for States in many areas such as power sector, adoption of DBT, solid waste management etc.
The Commission also submitted its report on whether a separate mechanism for funding of defence and internal security ought to be set up and if so how such a mechanism could be operationalised.
How many volumes does the report have?
The Report has been divided into 4 volumes. These are:
1- Volume I and II contains the main report and the accompanying annexes.
2- Volume III of the report is devoted to the Union Government and contains key departments in greater depth, with the medium-term challenges and the roadmap ahead.
3- Volume IV of the report is entirely devoted to the States. In this section, the Commission has analysed the finances of each State in great depth and has come up with State-specific considerations to address the key challenges that individual States face.
It is to be noted that once the report is tabled in the Parliament by the Union Government along with explanatory memorandum or action taken report on the recommendations submitted by the Commission, it will be available in the public domain.
| The Fifteenth Finance Commission (XV-FC) The Fifteenth Finance Commission (XV-FC) was constituted by the President of India under Article 280 of the Indian Constitution on 27 November 2017 to give recommendations on many unique and wide-ranging issues for five financial years, commencing 1 April 2020. Aims of the Commission The Commission was constituted to give recommendations on wide-ranging issues for a period of five years, commencing 1 April 2020. The main tasks of the Commission were to 'strengthen cooperative federalism, improve the quality of public spending and help protect fiscal stability'. Members of the Commission 1- Nand Kishore Singh (Chairman) |
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