{"id":18531,"date":"2018-04-11T17:20:57","date_gmt":"2018-04-11T11:50:57","guid":{"rendered":"http:\/\/blog.forumias.com\/?p=18531"},"modified":"2018-04-11T17:20:57","modified_gmt":"2018-04-11T11:50:57","slug":"15th-finance-commission-terms-of-reference-and-its-issues","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/15th-finance-commission-terms-of-reference-and-its-issues\/","title":{"rendered":"15th Finance Commission: Terms of reference and its issues"},"content":{"rendered":"<p><strong><u>Context:<\/u><\/strong><\/p>\n<ul>\n<li>After the introduction of 15<sup>th<\/sup> Finance Commission, there have been a slew of arguments against its Terms of Reference (ToR).<\/li>\n<\/ul>\n<p><strong><u>Background:<\/u><\/strong><\/p>\n<p><strong>1951:<\/strong><\/p>\n<ul>\n<li>The first\u00a0Finance Commission was established by the\u00a0<strong>President of India\u00a0in 1951<\/strong> under\u00a0<strong><em>Article 280<\/em><\/strong>of the\u00a0Indian Constitution.<\/li>\n<li>It was formed to define the <strong>financial relations between the\u00a0central government of India\u00a0and the\u00a0individual state governments<\/strong>.<\/li>\n<\/ul>\n<p><strong>November, 2017:<\/strong><\/p>\n<ul>\n<li>The Government of India,\u00a0with the approval\u00a0President of India, has constituted Fifteenth Finance Commission.<\/li>\n<li><strong>Please note:<\/strong> It is in pursuance of <strong>clause (1) of article 280 of the Constitution<\/strong>, read with the provisions of the <strong>Finance Commission (Miscellaneous Provisions) Act, 1951<\/strong>e.f.\u00a027<sup>th<\/sup>November, 2017.<\/li>\n<\/ul>\n<p><strong>Duration: <\/strong><\/p>\n<ul>\n<li>Five years<\/li>\n<\/ul>\n<p><strong>Commence on: <\/strong><\/p>\n<ul>\n<li>April 1<sup>st<\/sup>, 2020<\/li>\n<\/ul>\n<p><strong>Report:<\/strong><\/p>\n<ul>\n<li>Available by <strong>30th October, 2019<\/strong><\/li>\n<\/ul>\n<p><strong>Composition:<\/strong><\/p>\n<ul>\n<li><strong>Head:<\/strong> N.K.Singh, former Member of Parliament and former Secretary to the Government of India<\/li>\n<li><strong>Secretary to the Commission:<\/strong> Shri Arvind Mehta<\/li>\n<li><strong>Members of the Commission: <\/strong>Shri Shaktikanta Das, former Secretary to the Government of India and Dr.\u00a0Anoop Singh, Adjunct Professor, Georgetown University<\/li>\n<li><strong>Part time members of the Commission: <\/strong>Ashok Lahiri, Chairman (Non-executive, part time),\u00a0Bandhan Bank and Dr.\u00a0Ramesh Chand, Member, NITI Aayog.<\/li>\n<\/ul>\n<p><strong><u>The 15<sup>th<\/sup> Finance Commission\u2019s terms of reference are as follows: \u00a0<\/u><\/strong><\/p>\n<ul>\n<li>Review the <strong>current status<\/strong> of:\n<ul>\n<li>finance,<\/li>\n<li>deficit,<\/li>\n<li>debt levels, and<\/li>\n<li>cash balances and fiscal discipline efforts of the Union and the States.<\/li>\n<\/ul>\n<\/li>\n<li>Recommend a <strong>fiscal consolidation roadmap<\/strong> for sound fiscal management.<\/li>\n<li>Take into account the <strong>responsibility of the Central Government and State Governments<\/strong> to adhere to appropriate levels of general and consolidated government <strong>debt and deficit levels.<\/strong><\/li>\n<li>Foster higher <strong>inclusive growth<\/strong> in the country, guided by the principles of <strong>equity, efficiency and transparency. <\/strong><\/li>\n<li>Examine whether <strong>revenue deficit grants<\/strong> be provided at all.<\/li>\n<li>Review the present arrangements on <strong>financing Disaster Management initiatives<\/strong>, with reference to the funds constituted under the <strong>Disaster Management Act, 2005 (53 of 2005),<\/strong> and make appropriate recommendations thereon.<\/li>\n<li>Other key issues for consideration by the commission are as under:\n<ul>\n<li>Impact on the fiscal situation of the Union Government of substantially enhanced tax devolution to States following recommendations of the 14th Finance Commission, coupled with the continuing imperative of the national development programme including New India \u2013 2022;<\/li>\n<li>Impact of the GST, including payment of compensation for possible loss of revenues for 5 years, and abolition of a number of cesses, earmarking thereof for compensation and other structural reforms programme, on the finances of Centre and States.<\/li>\n<li>Efforts made by the States in expansion and deepening of tax net under GST;<\/li>\n<li>Efforts and progress made in moving towards replacement rate of population growth;<\/li>\n<li>Progress made in increasing tax\/non-tax revenues, promoting savings by adoption of Direct Benefit Transfers and Public Finance Management System, promoting digital economy and removing layers between the government and the beneficiaries;<\/li>\n<li>Progress made in sanitation, solid waste management and bringing in behavioural change to end open defecation.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong><u>Major issues revolving around 15<sup>th<\/sup> Finance Commission\u2019s Terms of References are as follows: <\/u><\/strong><\/p>\n<ul>\n<li>While the terms of reference for the <strong>14th Finance Commission<\/strong> were to use the <strong>1971 Census data<\/strong> for determining devolution of taxes, duties and grants-in-aid.<\/li>\n<li>The Central government asked the 15th Finance Commission\u2019s ToR to use the <strong>2011 data.\u00a0<\/strong><\/li>\n<li>This move would result in <strong>lower resource allocation<\/strong> to the <strong>southern States.<\/strong><\/li>\n<\/ul>\n<p><strong><u>Reponses to the concern: (11<sup>th<\/sup> April, 2018)<\/u><\/strong><\/p>\n<ul>\n<li>Union Finance Minister\u00a0Arun Jaitley, <strong>denied the criticisms.<\/strong><\/li>\n<li>According to him:\n<ul>\n<li>Finance Commissions use <strong>both qualitative and quantitative criteria<\/strong><\/li>\n<li><strong>Population figures<\/strong> serve as a good proxy for the needs of the people in a quantitative sense.<\/li>\n<li><strong>Income distance <\/strong>captures the relative poverty, to provide a qualitative analysis.<\/li>\n<li>The Terms of References of 15<sup>th<\/sup> Finance Commission rightly balance both the <strong>\u201cneeds\u201d<\/strong> represented by latest population and <strong>\u201cprogress towards population control\u201d.<\/strong><\/li>\n<li>Also, it recognizes the efforts of all the States which have done well in population control.<\/li>\n<\/ul>\n<\/li>\n<li>Please note: The next meeting regarding the issue will be held in <strong>May, 2018.<\/strong><\/li>\n<li>Telangana, Tamil Nadu, Delhi, West Bengal, Odisha and Punjab are also expected to take part.<\/li>\n<\/ul>\n<p><strong><u>Conclusion:<\/u><\/strong><\/p>\n<p>The need of the hour is to address the concerns of stakeholders and evolve principles that lead to an equitable distribution of resources between states and between centre and states.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: After the introduction of 15th Finance Commission, there have been a slew of arguments against its Terms of Reference (ToR). Background: 1951: The first\u00a0Finance Commission was established by the\u00a0President of India\u00a0in 1951 under\u00a0Article 280of the\u00a0Indian Constitution. It was formed to define the financial relations between the\u00a0central government of India\u00a0and the\u00a0individual state governments. November, 2017:&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/15th-finance-commission-terms-of-reference-and-its-issues\/\">Continue reading <span class=\"screen-reader-text\">15th Finance Commission: Terms of reference and its issues<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":18532,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-18531","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy-2","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2018\/04\/15th-Finance-Commission-Taxscan.jpg?fit=773%2C388&ssl=1","views":{"total":1350,"cached_at":""},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/18531","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=18531"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/18531\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/18532"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=18531"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=18531"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=18531"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}