With the appointed day, just a month away, the Union Government has expedited the process for apportioning the funds due under the 13th Finance Commission for the current financial year between Telangana and the successor State of Andhra Pradesh on the basis of population and other parameters.
The Finance Commission award would be in force till March 31, 2015, and thereafter the financial award of the 14th Finance Commission would come into effect from April 1 and be in force for five years, till March 31, 2020.
The 14th Finance Commission was constituted in January this year and it would submit its report and recommendations by October 31 for approval. However, when the terms of reference were notified for the new Finance Commission headed by Dr.Y.V. Reddy, Andhra Pradesh was a united State.
The Union Cabinet which met on Thursday therefore approved the proposal for insertion of additional term of reference in the notified terms of reference of the 14th Finance Commission. The Cabinet resolved that the Commission would also take into account the resources available to the two States post appointed day and make separate awards for Telangana and Andhra Pradesh. The Cabinet approved proposal would be sent to the President for his nod. The proposal was earlier vetted by the Ministry of Law and Justice.
The Finance Commission would make recommendations for the devolution of tax revenue from the Centre to the States and grants, basically to the panchayats and municipalities. Under the 13th Finance Commission, the united Andhra Pradesh had been allocated about Rs.20,000 crore under the tax devolution and another Rs.5,000 crore through grants for the current fiscal. This amount which has not been released will be released to the successor States after the appointed day.
While tax devolution to the two States will be on the basis of population, the grants would be based on different parameters, sources said.
