15th Finance Commission approved
GENERAL STUDIES- II – Appointment to various Constitutional posts, powers, functions and responsibilities of various Constitutional Bodies.
The Union Cabinet chaired by the Prime Minister Narendra Modi has approved the setting up of the 15thFinance Commission. Under Article 280 (1) of the Constitution,it is a Constitutional obligation. The Terms of Reference for the 15th Finance Commission will be notified in due course of time.
- The Finance Commission is set up every five years and the government had allocated Rs10 crore in the 2017-18 budget for the FFC.
- The recommendations of the previous 14th Finance Commission (FFC), chaired by former Reserve Bank of India (RBI) governor Y.V. Reddy, are valid from 2015 to 2020.
- The recommendations of the 15th Finance Commission will be implemented for the period starting 1 April 2020 to 31 March 2025.
- The FFC is considered to have fundamentally reset the Centre-state fiscal relationship by raising the untied share of states in net Central taxes to 42% from 32% after ending discretionary resource transfers from the Union to the states.
- Article 280(1) of the Constitution lays down that a Finance Commission (FC) should be constituted “…within two years from the commencement of this Constitution and thereafter at the expiration of every fifth year or at such earlier time as the President considers necessary…”.In keeping with this requirement, the practice has generally been to set up next Finance Commission within five years of the date of setting up of the previous Finance Commission.
- Fourteen (14)Finance Commissions have been constituted in the past. The 14thFinance Commission was set up on 02.01.2013 to make recommendations covering the period of five years commencing on 1st April, 2015.
- The Commission submitted its Report on 15th December, 2014. The recommendations of the 14thFinance Commission are valid upto the financial year 2019-20.
- In terms of Constitutional provisions, setting up the 15thFinance Commission, the recommendations of which will cover the five years commencing on April 1, 2020, has now become due.