The fourteenth finance commission has been constituted in pursuance of the provisions of the constitution of india by the president under the chairmanship of dr. Recomendations of the 14th finance commission west. Tax devolution and grants to bihar as per the recommendations of thirteenth finance commission rs. The fourteenth finance commission was constituted by the president under article 280 of the constitution on jan. Indian economy and issues relating to planning model answer. The recommendations of the fourteenth finance commission ffc will guide the centrestate fiscal relationship and lay the basis for a large portion of the transfers that will be made by the government of india goi to the state governments over the period 201516 to 201920. Guidelines for the performance grant disbursement in fourteenth finance commission. The fourteenth finance commission had submitted its report to the president pranab mukherjee in december 2014. The fourteenth finance commission has come up with some bold and gamechanging recommendations such as an increase in the tax share going to states from 32% to 42%, setting up of the fiscal council to make the centre accountable, and doing away with direct transfers to states under centrallysponsored schemes. Fifteenth finance commission department of economic. The disbursement of the performance grant in fourteenth finance commission. The first finance commission was established by the president of india in 1951 under article 280of the indian constitution.
Many actors, including state governments, have expressed concerns over the implication of these changes on the fiscal space available, state autonomy and social sector investments. Thirteenth finance commission economic and political. The recommendation of fourteenth finance commission for the award period 201520 include, interalia, release of grantinaid to state. Union government has accepted recommendations of the 14th finance commission fc as per its agenda of cooperative federalism. The tax sharing recommendations given by the fc does not form the part of consolidated fund of india. Public notice issued by 14th finance commission wbxpress. Budget transparency and participation recommendations to. The report is believed to contain a dissent note from planning commission member abhijit sen. However, the most radical of the changes introduced in the ffc recommendations is outlined in the summary given below. Recommendations of the 14th finance commission the hindu. Its report, based on the recommendations of a task force constituted to study the issue, recommends a highly uniform and centralised format that does not adequately recognise a tax reform exercise in a multilevel fiscal system that.
The one of the important 14th finance commission recommendations is enhanced share of the state in the revenue. Background the fourteenth finance commission 14fc stipulates that a detailed procedure for the disbursal of the performance grant to urban local bodies ulbs would have to be designed, subject to certain eligibility criteria. Impact of changes in fiscal federalism and four teenth. It was formed to define the financial relations between the central government of india and the individual state governments.
The impact of the recommendations of the fourteenth. Major recommendations of fourteenth finance commission ffc accepted by the. Article 280 of the constitution of india requires the constitution of a finance commission every five years, or earlier. Reddy 14th finance commission holds that tax devolution is the primary route for resource transfer to. All you need to know about finance commission the hindu. Table of contents 1 ffc recommendations and related reforms 2 the fiscal space of the states aggregate data. Study of revenue implications of 14th finance commission. Budget transparency and participation recommendations to the fourteenth finance commission. The fourteenth finance commission ffc recommended a hike in tax devolution to the states from 32% to 42% of central revenues as divisible pool. Our approach and recommendations on vertical devolution 89. Impact of 14th finance commissions recommendations on the state finances and social sector schemes in rajasthan. Highlights of 14th finance commission report government. This is the largest ever jump in percentage of devolution.
The fourteenth finance commission ffc union budget. Read more about guidelines for local body grants recommended by the fourteenth finance commission. Government has accepted fcs recommendation to increase the devolution of tax receipts from the centre to the states to 42 percent. As per the recommendations of the 14th finance commission, grantsinaid constitute 12% of the central transfers to states. The thirteenth finance commission lay the groundwork for implementing the gst in 2010. The 14th finance commission report has been accepted by the center,the report has been tabled today and it recommended that the center transfer 42% of divisible pool to the states, including taxes and grants the th finance commission had suggested it a 39. The thirteenth finance commission was required to look into the revenue impact of the introduction of the goods and services tax. It highlights the fact that there has been a serious deterioration in the fiscal.
Though the centre and the states were ruled by the same party, except. Guideline for use of incentive amount in state finance commissions. Pdf impact of 14th finance commissions recommendations. The fifteenth finance commission xvfc or 15fc is an indian finance commission constituted in november 2017 and is to give recommendations for devolution of taxes and other fiscal matters for five fiscal years, commencing 20200401. Its primary job is to recommend measures and methods about how revenues are to be distributed between the centre and states. Set up under article 280 of the constitution, its core responsibility is to evaluate the state of finances of the union and state governments, recommend the sharing of taxes between them, lay down the principles determining the distribution of these taxes among states. Set up under article 280 of the constitution, its core responsibility is to evaluate the state of finances of the union and state governments, recommend the sharing of taxes between them, lay down the principles determining the distribution of these taxes among. A sound system of intergovernmental fiscal transfers constitutes the cornerstone of a strong and stable federal polity. This was an important step towards cohesive provincial units. The following points highlight the four main recommendations of the eleventh finance commission. Recommendations for 14th finance commission given below is a summary list of recommendations which we believe are worthy of consideration for inclusion in the report of the 14th finance commission fc. Vertical fiscal imbalances vfi 4 going beyond public spending. Background of finance commission 15th finance commission pdf. Pdf the ability of the finance commission in shaping fiscal federalism.
Vitta ayoga was established by the president of india in 1951 under article 280 of the indian constitution. Essential recommendations of finance commission of india. Discuss the main recommendations of 14th finance commission. It is observed that the growth of tied fund to health in real term is much lower than the untied one during 14th fc period irrespective of category of states. Highlights of 14th finance commission report february 2015 ficci economic affairs and research division government accepts 14th finance commission recommendation for tax devolution receipts states share in the net proceeds of union tax revenues increased to 42% from 32% earlier.
Fourteenth finance commission ffc for rural and urban local bodies local bodies grant. Recommendations 14th finance commission headed by former rbi governor y. One of the core tasks of a finance commission as stipulated in article 280 3 a of the constitution is to make recommendations regarding the. This was taken forward by the fourteenth finance commission, who also mandated the creation of a fiscal council. Fourteenth finance commission economic and political. The fourteenth finance commission invites suggestions on issues related to the terms of reference from the members of the general public, institutions and organizations.
The second finance commission was set up in june 1956. Constitution of fifteenth finance commission the government of india, with the approval honble president of india, has constituted fifteenth finance commission in pursuance of clause 1 of article 280 of the constitution, read with the provisions of the finance commission miscellaneous provisions act, 1951 w. Union budget state budget 3 going beyond public spending. The accepted recommendations are for the fiveyear period 201516 to 201920. The fourteenth finance commission is of the view that tax tax devolution should be the primary route of resources to the states. Introduction the fourteenth finance commission ffc was constituted by the president on january 2, 20 to give recommendations on specified aspects of centre state fiscal relations during 201520.
Cyclicality of subnational resources nipfp 2 28 the impact of the recommendations of the fourteenth finance commission. Are the recommendations of the 14th finance commission unanimous. Fourteenth finance commission ffc recommendations 2 the fourteenth finance commission ffc set the stage for a radical overhaul of centrestate relations. The ffc has submitted its recommendations for the period 201516 to 202021. The finance commission is a constitutionally mandated body that is at the centre of fiscal federalism. The commission shall make recommendations regarding the sharing of union taxes, principles governing grantsinaid to states and transfer of resources to local. The fourteenth finance commission ffc was appointed on 2 nd january, 20 under the chairmanship of dr. Finance commission concepts and definitions tax devolution one of the core tasks of a finance commission as stipulated in article 280 3 a of the constitution is to make recommendations regarding the distribution between the union and the states of the net proceeds of taxes. The commissions chairman is nand kishore singh, with its fulltime members being ajay narayan jha, ashok lahiri and anoop singh. The finance commission can be constituted at such an earlier time as the president considers necessary. The devolution formula which has become uniform without differentiating special category states and including the forest area in the formula has enabled hilly terrain special category states. The commission recommends to increase the tax devolution of the divisible pool to states to 42% for years 2015 to 2020. These recommendations are for a duration of 201516 to 201920. The first finance commissions recommendations were criticised on the grounds that a much smaller importance was given to the sources of collection than what was desired by the economically stronger states.
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