New Delhi, Dec 4: The Fifteenth Finance Commission held its first meeting on Monday at North Block in New Delhi. The meeting was held under the Chairmanship of N K Singh and was attended by all the other Members of the Commission as well as the part time members. The Fifteenth Finance Commission was constituted on 27th of November 2017.
The Commission held preliminary discussions on the Terms of Reference for the Fifteenth Finance Commission as per the Order made by the President of India and notified by the Ministry of Finance on 27th November, 2017. The Commission was cognisant that it has been assigned wide-ranging Terms of Reference which needed to be suitably addressed. Towards this objective, it was felt that wide-ranging consultations with all stakeholders including various Ministries of the Union Government, all State Governments, Local Bodies, Panchayats and Political parties of each State Government needed to be expeditiously initiated.
The Commission recognised that there was also need to undertake analytical papers, analysis from leading research organisations within the country and elsewhere to suitably address the Terms of Reference.The Commission was keen to seek academic inputs and interactions with leading Think Tanks and domain knowledge experts which would assist the Commission in its work. The Commission approved the setting-up of its office at Jawahar Vyapar Bhawan on Janpath in New Delhi.
The commission is set up to review the current status of the finance, deficit, debt levels, cash balances and fiscal discipline efforts of the Union and the states. It will also recommend a fiscal consolidation road map for sound fiscal management. The commission is required to make recommendations on the distribution of the net proceeds of taxes between the Centre and the states, as per Article 280 of the Constitution. The commission also suggests the principles which should govern the grants in aid of the revenues of the states out of the Consolidated Fund of India.
The Cabinet Committee on Economic Affairs (CCEA) in mid-November had approved a proposal to set up of the 15th Finance Commission (FC) and finalise its terms of reference, finance minister Arun Jaitley had said on November 22 after a meeting of the Union Cabinet. The FC is formed every five years to recommend principles governing the allocation of tax revenue between the Centre, states and local bodies. The recommendations of the previous 14th FC, headed by former RBI governor YV Reddy, are currently valid for a period of five years through March 2020. In the Budget 2017-18, the government had allocated Rs 10 crore for setting up of the 15th FC.
The 14th FC had suggested an unprecedented 10 percentage points rise in tax devolution to states to 42% of the divisible pool of the tax revenue between FY16 and FY20, compared with the previous five-year period. It was accepted by the Narendra Modi government as it batted for cooperative federalism.