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15th Finance panel could set tailored fiscal roadmaps for states

The recommendations of the FFC will be applicable from the financial year 2020 to 2025

The (FFC), whose composition and terms of reference are expected to be announced by the end of this year, may be tasked with recommending roadmaps for to meet their level targets by the end of the year 2025.

The Commission, like the fourteen before it, will have to recommend ways on devolving the divisible pool between the and and among the These will be its main terms of reference as mandated by Article 280 of the



The may also be tasked with suggesting the debt-gross state domestic product (GSDP) levels of each state and combined (GDP) levels for all Not only that, just like the Responsibility and panel has suggested a roadmap for the to reduce its debt-ratio to 40 per cent by FY2023, the may be formulating a roadmap for states, Business Standard has learnt.

The recommendations of the will be applicable from the financial year 2020 to 2025. Sources say that the draft terms of reference (TORs) have already been drawn up and that these could be tweaked.

Additionally, sources close to the matter also said that there is a major debate going on in the higher levels of the government on whether the should use the 2011 census for its work. Till the fourteenth finance commission, the 1971 census was used, though it recommended distribution of grant to for local bodies using the 2011 census.

“If the is recommending a roadmap for states, it will have to look at a lot of parameters, including size, population, migration, private and public investment, social spending, education, health, mortality, among others. It would need to look at the latest available data,” said an official aware of the developments, adding that the issue was being discussed among policymakers in the central government.

Also, while the will be tasked with studying the impact of the nationwide (GST), it may treat the as part of the divisible pool to be devolved to and the Centre, and not as a separate issue, the official quoted above said.

As reported earlier, may be tasked with suggesting ways to provide more space and resources for to deal with agriculture crises. Such a move would come in the backdrop of large scale protests by around the country. Five have announced farm-loan waivers, namely Uttar Pradesh, Punjab, Karnataka, Telangana and Maharashtra, totalling roughly around Rs 2 lakh crore.

This has prompted concerns about their health and resources, which are already stretched due to the issuance of bonds under discoms restructuring.

Also, former parliamentarian, and expenditure secretary N K Singh is being considered for the position of the chairman of the and has emerged a front-runner.

The Finance Commission is set up every five years to suggest the rules which govern the distribution of tax proceeds among the Centre, and local administrative bodies.

The Fourteenth Finance Commission was headed by former Reserve Bank of India governor It had recommended the devolution of an unprecedented 42 per cent of the divisible pool to during 2015-16 to 2019-20, against 32 per cent suggested by the previous commission.

First Published: Wed, August 09 2017. 15:35 IST
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