The Government has constituted the 15th Finance Commission. Former bureaucrat and ex-Member of Parliament NK Singh will chair the Commission which will make recommendations for the five years commencing 1st April 2020.
In a tweet, Economic Affairs Secretary Subhash Chandra Garg said, the commission will recommend devolution of shareable central taxes to the States. He said the commission will also review several important aspects of federal fiscal finance.
Former Secretary Economic Affairs Shaktikanta Das and Adjunct Professor of Georgetown University, Dr Anoop Singh will be the members of the Commission. Chairman of Bandhan Bank, Dr Ashok Lahiri and NITI Aayog Member Dr Ramesh Chand will be the Part-time members. Arvind Mehta will be the Secretary to the Commission.
Soon after the appointment, Mr Singh said it is imperative for such a panel to examine implications of GST on finance of the Centre and states. He said it comes as no surprise that the Goods and Services Tax is included in terms of reference.
Mr Singh said the fact that GST was propelled through several constitutional amendments which included the states being participants in these constitutional amendments enjoins upon any Finance Commission the need to examine implications of GST in terms of finances of both the Centre and states.
The Commission will make recommendations on the distribution of net proceeds of taxes between Centre and States, the principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India, the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State.
The Commission will also review the current status of the finance, deficit, debt levels, cash balances and fiscal discipline efforts of the Centre and the States and recommend a fiscal consolidation roadmap for sound fiscal management.
While making its recommendations, the Commission look at the resources of the Central Government and the State Governments for the five years commencing on 1st April 2020 on the basis of the levels of tax and the non-tax revenues likely to be reached by 2024-25.
It will also look at the impact of the GST, including payment of compensation for possible loss of revenues for 5 years. The Commission may consider proposing measurable performance-based incentives for States, at the appropriate level of government. The Commission will make its report available by 30th October 2019.