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Fifteenth Finance Commission to hand in report on Nov. 9

Three years after it was constituted, the Fifteenth Finance Commission has finalised its report for fund devolution from the Centre to States for the five years from 2021-22 to 2025-26.

The panel, which had to grapple with an enlarged brief that included determining the viability of a separate defence and national security fund as well as the issue of GST compensation, will submit its report to the President on November 9. The report will be subsequently tabled by the Finance Minister in the Parliament along with an action taken report.

Chairman N.K. Singh and members Ajay Narayan Jha, Anoop Singh, Ashok Lahiri and Ramesh Chand signed the report on Friday, the Commission said in a statement. A copy of the report will be presented to Prime Minister Narendra Modi later next month.

The Fifteenth Finance Commission was constituted on November 27, 2017, against the backdrop of the abolition of the Planning Commission and the distinction between Plan and non-Plan expenditure, and introduction of the Goods and Services Tax (GST).

Term extension

Although its original remit was to recommend the fund-sharing formula between the Centre and States from 2020-21 to 2024-25, the commission’s term was extended by 11 months. Last year, the government had requested the Commission to submit an initial report just for the year 2020-21.

That report had pared the States’ share of the divisible tax pool from 42%, as recommended by the Fourteenth Finance Commission, to 41%, citing the creation of the Union Territories of Jammu and Kashmir and Ladakh.

The Commission had then said that some of the key recommendations it was required to make would feature in its final report, including the viability of creating a separate defence and national security fund as suggested by the Centre. States would keenly await these recommendations as it may translate into a lower share of funds for them.

The panel is also 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. However, the disruption in economic activity due to the pandemic and lockdowns this year has dampened cess collections used to recompense States.

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Printable version | Nov 28, 2020 10:51:25 PM | https://www.thehindu.com/business/fifteenth-finance-commission-to-hand-in-report-on-nov-9/article32986016.ece

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