The 15th Finance Commission has completed its deliberations and finalised its report for fund devolution between Centre and States for the years 2021-22 to 2025-26. The Commission will submit its report to the President on November 9 and it will be subsequently tabled by the Finance Minister in Parliament along with an action taken report.
The report was signed on Friday by the Commission’s chairman NK Singh and its members Ajay Narayan Jha, Prof. Anoop Singh, Ashok Lahiri and Ramesh Chand, a statement from the Commission said. The Commission will also present a copy of its report to Prime Minister Narendra Modi later next month.
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The 15th Finance Commission was constituted on November 27, 2017 against the backdrop of the abolition of Planning Commission and the distinction between Plan and non-Plan expenditure, and the introduction of the Goods and Services Tax (GST).
Although its original remit was to recommend the fund-sharing formula between Centre and States from 2020-21 to 2024-25, its term was extended by 11 months and it was requested by the government last year to submit an initial report just for the year 2020-21.
The first report had marginally reduced the States’ share of the divisible tax pool from 42% as recommended by the 14th Finance Commission, to 41%, citing the creation of the union territories of Jammu and Kashmir, and Ladakh after the abolition of Article 370.
The Commission had then said that some of the key recommendations was required to make as per its terms of reference will feature in its final report, including the viability of creating a separate defence and national security fund as suggested by the Centre. States will keenly await its recommendations on this front as it may translate into a lower share of funds for them.
The Commission is expected to factor in unpaid GST compensation dues to States for this year, while working out States’ revenue flow calculations for the years beyond 2022. States were guaranteed compensation by the Centre for revenue losses owing to the implementation of the GST for a period of five years. The disruption in economic activity due to the pandemic and national lockdown this year has however dampened cess collections used to recompense States.
