Related Topic in KAS Prelims Syllabus:
Indian Constitution [Paper-I]: Constitutional Authorities – Powers, Functions and Responsibilities
- 15th Finance Commission submitted its interim report on devolution formula for the financial year 2020-21 to President Ram Nath Kovind.
- The devolution formula spells out how the Centre plans to share the taxes collected by it with the States.
- The report will first be studied and then a final view will be taken by the Cabinet following which it will be tabled in Parliament just before the Union Budget next year.
- Only after that, the contents will be made public.
15th Finance Commission
- 15th Finance Commission was constituted by the President on November 27, 2017.
- The Commission will make recommendations for a five-year period from April 1, 2020 to March 31, 2025.
- It consists of a Chairman and 4 other members who are all will be appointed by the President.
- N.K. Singh is the Chairman of 15th Finance Commision of India.
- The main tasks of the commission include strengthen cooperative federalism, improve the quality of public spending and help protect fiscal stability.
- It was constituted against the backdrop of the abolition of Planning Commission (as also of the distinction between Plan and non-Plan expenditure) and the introduction of the Goods and Services Tax (GST), which has fundamentally redefined federal fiscal relations.
- The Terms of Reference of the current Commission have some distinctive features, including recommending monitorable performance criteria for important national flagship programmes and examining the possibility of setting up a permanent non lapsable funding for India’s defence needs.
About Finance Commission
- Finance Commission is a constitutionally mandated body that is at the centre of fiscal federalism.It was set up under Article 280 of the Constitution.
- The first Finance Commission was set up in 1951 and was chaired by K.C. Neogy.
- The core responsibility of the Commission is to evaluate the state of finances of the Union and State Governments, recommend the sharing of taxes between them and lay down the principles determining the distribution of these taxes among States.
- Its working is characterised by extensive and intensive consultations with all levels of governments, thus strengthening the principle of cooperative federalism.
- Its recommendations are also geared towards improving the quality of public spending and promoting fiscal stability.
[Source: The Hindu, fincomindia.nic]