New Delhi: The Finance Commission will hold a consultation meeting with the Finance Ministers of all States on 13 March, in New Delhi. This is to discuss issues related to the final report of the Finance Commission for 2021-26, which the Commission is likely to submit in October. This meeting is part of the Commission’s continued engagement with the states. In particular, the Commission would seek views of the Finance Ministers on how the State Fiscal Responsibility and Budget Management Acts (FRBMs) can be aligned with the Central FRBM legislation (Fiscal Responsibility and Budget Management Act, 2003) and also determine the priority of the state-specific grant proposals that have been submitted by the State Governments.
The Commission would also welcome any additional inputs which can inform its approach to the complex issues related to fiscal federalism. Considering the significantly enhanced response both, Urban Local Bodies and Rural Local Bodies of disaster management, an exchange on optimum utilization of funds will also be part of the discussion of the Commission with the States.
The issue of timely constitution of State Finance Commissions as well as the action taken post their recommendations is likely to be discussed. The Commission also plans to discuss the projections of the State Governments regarding the State Domestic Product (SDP) and the tax buoyancy projected by them for the period of the award of the Commission – this being very significant as it impacts the quantum of resource for the revenue deficit grants.
The Fifteenth Finance Commission’s terms of reference were amended by the President of India in November 2019 to extend the term of the Commission till October 2020. While extending the term, the Commission has also been asked to submit two reports, one for the year 2020-21 and a second report for the period from 2021-22 to 2025-26.
The Finance Commission’s report for the financial year 2020-21 was substantially accepted by the Union Government and presented in the Lok Sabha along with the Union Budget for 2020-21. The Commission is now working earnestly to complete the task of recommending fiscal transfers for the extended award period.
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