15TH FINANCE COMMISSION

Submitted to
Mr.Ankit Awasti

Submitted by
SANSKRITI SAMADHIYA

B.A.LLB (Hons.) Student

Semester- I, Section- ‘A’

Date of Submission: 14/10/2019

Hidayatullah National Law University

Naya Raipur (C.G) 492002
 DECLARATION

I, SANSKRITI SAMADHIYA, hereby declare that, the project work entitled, ‘15TH FINANC

COMISSION’ submitted to Hidayatullah National Law University, Raipur is record of an original

work done by me under the able guidance of Mr.Ankit Awasti, of Hidayatullah National Law

University, Raipur (C.G).

SANSKRITI SAMADHIYA

SEM- I “A”

ROLL NO. 145

DATE- 23/10/2019
 CERTIFICATE

This is to certify that the project entitled, “15TH FINANCE COMISSION” submitted by

"SANSKRITI SAMADHIYA" in partial fulfilment of the requirements for the award of "B.A.LLB

(Hons.)" in “Law” at the “Hidayatullah National Law University” is an authentic work carried out

by him under my supervision and guidance.

To the best of my knowledge, the matter embodied in the project has not been submitted to any

other University / Institute for the award of any Degree or Diploma.

Date: 23/10/2019

Mr.Ankit Awasti

Legal Method Professor, HNLU Raipur

Signature
 ACKNOWLEDGEMENT

Working on the project “15TH FINANCE COMISSION” was a source of immense knowledge to me.

I would like to express my sincere gratitude to Mr.Ankit Awasti sir for his guidance and valuable

support throughout the course of this project work. I acknowledge with a deep sense of gratitude, the

encouragement and inspiration received from our faculty members. I would also like to thank my

parents and friends for their love and support.

I take this opportunity to also thank the University and the Vice Chancellor for providing extensive

database resources in the Library and through Internet.

SANSKRITI SAMADHIYA.

SEMESTER-I
AIMS AND OBJECTIVES
1. To study the various functions performed by the state, sovereign and non-sovereign.

2. To study the difference between sovereign and non-sovereign functions of the state.

3. To study when the state can be made liable for the tortious conduct of its employees.

4. To study various cases based on sovereign and non-sovereign functions.

HYPOTHESIS
The researcher is of the view that a detailed study of precedents can give us an insight into
how the sovereign and non-sovereign functions have been distinguished from each other.

The State is engaged with various functions, but all of them cannot be construed as primary
inalienable functions and for the sovereign functions, the state is not answerable to any court
of law.

RESEARCH METHODOLOGY
As the research work for this topic is confined to the library and books and no field work has
been done. Hence, researcher in this research work has opted the doctrinal methodology of
research. For doing the research work various sources has been used. Researcher in the
research work has relied upon the sources like various books on ‘law of torts’, statutes and
online materials is also helpful source for the research.

SOURCES OF DATA
The researcher has used primary and secondary sources of data for the purpose of research.

LIMITATIONS
Area of limitations - Every study has own limitation due to the limited time, lack of sufficient

financial resources and limited area of survey/study of the subject matter.

 INTRODUCTION:

The Finance Commission, set up in 1951 under Article 280 of the Constitution, basically
decides how revenue has to be distributed between the Centre and the States. In addition, the
Commission also decides the principles on which grants-in-aid will be given to the States.

The key role Finance Commission in India is to act as an instrument to divide proceeds of
divisible taxes between the states and the Union government or in cases of taxes that are
collected by the centre but the proceeds of which are allocated between the states, to
determine the principles of such allocation.

The Finance Commission of India also determines the principles of governing the grants
in aids of the revenues of states out of the consolidated fund of India. It is an important
function of the Indian Finance Commission. The commission has the responsibility of
considering any matter referred to the commission by the President in the interest of sound
finance.

The President under Article 280 lays the recommendations of the finance commission before
each House of the Parliament with an explanatory note as to the action to be taken on the
recommendations.

The Finance Commission distributes of proceeds of Income-tax between the union and the
states. But taxes on the payments of the central government are attributable only to the union
territories.

Under Article 280 (C), the President may refer any matter to the Finance Commission in the
interest of “sound finance”. Till now the President of India has asked the commission to make
recommendations on the principles governing distribution of the net proceeds of estate duty
in respect of Property Tax on Railway fare and excise duties on sugar and tobacco. The
President also sought recommendations on the rates of interest, and terms of repayment of
loans to the various states by the Government of India.

The 15th Finance Commission was constituted on November 27, 2017 and is headed by
former Revenue Secretary and former Rajya Sabha MP N.K. Singh.

Contents
1. What is a finance commission?....................................................................................................... 7

1.1. What is it constituted for ............................................................................................................. 8

1.2. The Finance Commission (Miscellaneous Provisions) Act, 1951 ............................................ 9

2. History of Finance Commission..................................................................................................... 11

2.1. First Finance Commission ..................................................................................................... 12

2.2. Second Finance Commission................................................................................................. 13

2.3. Third Finance Commission .................................................................................................... 15

2.4. Fourth Finance Commission ................................................................................................. 17

2.5. Fifth Finance Commission ..................................................................................................... 18

2.6. Sixth Finance Commission .................................................................................................... 19

2.7. Seventh Finance Commission ............................................................................................... 20

2.8. Eighth Finance Commission .................................................................................................. 20

2.9. Ninth Finance Commission ................................................................................................... 22

2.10. Tenth Finance Commission ............................................................................................... 24

2.11. Eleventh Finance Commission .......................................................................................... 25

2.12. Twelfth Finance Commission ............................................................................................ 27

2.13. Thirteenth Finance Commission ....................................................................................... 28

2.14. Fourteenth Finance Commission ...................................................................................... 30

3. Fifteenth Finance Commission...................................................................................................... 33

4. Conclusion..................................................................................................................................... 37
1. What is a finance commission?
Finance commission is a body set up under Article 280 of the Indian Constitution.
Basically, the mismatch in the revenue powers and expenditure responsibilities of the
government and other regional disparities where the state incurs expenditure
disproportionate to their sources of revenue is known as a situation of fiscal
imbalance. So, to bridge this gap of fiscal imbalances a finance commission is
constituted. The finance commission looks after and recommends distribution of
revenues between centre and the states. Finance Commissions mainly focuses on the
financial relations between the State government and the Central government. These
recommendations progressively increase share of the state governments in the
proceeds of the income tax. They also increased gradually the amount of grants-in-
aids to be given to the states. As a result the states now enjoy considerable degree of
financial autonomy so necessary for the proper functioning of the federation. It can be
said that the Finance Commission as an autonomous body has served a wonderful
purpose. In, as complex a society as India is, it acted as an agency to bring about
coordination and cooperation for smooth working of a federal system.
Under the Constitution, the basis for sharing of divisible taxes by the Centre and the
States and the principles governing grants-in-aid to the states have to be decided by
the Commission every five years. The President can refer to the Commission any
other matter in the interest of sound finance.
The recommendations of the Commission together with an explanatory memorandum
as to the action taken by the Government on them are laid before each house of
Parliament. The Commission has to assess the increase in the Consolidated Fund of a
state to affix the resources of the Panchayat in the state. It also has to evaluate the
increase in the Consolidated Fund of a state to affix the resources of the
Municipalities in the state.
The Commission has been given passable powers to perform its function and within
its area of activity. It has all the powers of the Civil Court as per the Code of Civil
Procedure, 1908. It can call any witness, or can ask for the production of any public
record or document from any court or office. It can ask any person to give information
or document on matters as it may feel to be useful or relevant. It can function as a
civil court in discharging its duties.
 1.1. What is it constituted for?
It is constituted primarily to ensure a sense of equality in public services across
the state. Besides suggesting the distribution of tax payers’ money among the
states it lays down the principles for giving out grant-in-aid to states and other
local bodies.
The Finance Commission consists of a Chairman and four other members to be
appointed by the President of India. The Constitution has not mentioned the
qualifications of either the Chairman or its member; they are to be determined by
the Parliament.
The Parliament can also lay down the manner in which they shall be selected. That
is the reason why the Chairmen of the Finance Commissions have been reputed
politicians, former justices, economists, technocrats and reputed public
personalities.1

Article 280 (3) speaks about the functions of the Finance Commission. The Article
states that it shall be the duty of the Commission to make the recommendations to
the President as to:
i. The distribution between the Union and the States of the net proceeds of taxes,
which are to be, or may be, divided between them and the allocation among the
states of the respective shares of such proceeds;
ii. To determine the quantum of grants-in-aid to be given by the Centre to states
[Article 275 (1)] and to evolve the principles to govern the eligibility of the state
for such grant-in-aid;
iii. Any other matter referred to the Commission by the President of India in the
interest of sound finance. Several issues like debt relief, financing of calamity
relief of states, additional excise duties, etc. have been referred to the Commission
invoking this clause.
The Commission shall determine its procedure and shall exercise such powers in
the performance of its functions, as the Parliament may, confer on it by law. The
President shall place the Report of the Commission together with an Explanatory

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 Memorandum before each house of Parliament. In practice, the recommendations
of Finance Commission are accepted by the Government of India for the
distribution of shared tax revenue, as well as for grant-in-aid.

1.2. The Finance Commission (Miscellaneous Provisions) Act,

19512
The Finance Commission (Miscellaneous Provisions) Act, 1951 was passed to give
a structured format to the finance commission and to bring it to par with world
standards, by laying down rules for the qualification and disqualification of
members of the commission, and for their appointment, term, eligibility and
powers.

Qualifications of the members

The Chairman of a finance commission is selected from people with experience of

public affairs. The other four members are selected from people who:

1. Are, or have been, or are qualified, as judges of a high court,

2. Have knowledge of government finances or accounts, or

3. Have had experience in administration and financial expertise; or

4. Have special knowledge of economics

Procedure and powers of the commission

The commission has the power to determine their own procedure and:

Has all powers of a civil court as per the Civil Procedure Code, 1908.

Can summon and enforce the attendance of any witness or ask any person to
deliver information or produce a document, which it deems relevant.

Can ask for the production of any public record or document from any court or
office.

Shall be deemed to be a civil court for purposes of Sections 480 and 482 of the

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THE FINANCE COMMISSION (MISCELLANEOUS PROVISIONS) ACT, 1951 ACT NO. 33 OF 1951
Code of Criminal Procedure, 1898

Disqualification from being a member of the commission

A member may be disqualified if:

He is mentally unsound; and as follows-

He is an undischarged insolvent;

He has been convicted of an immoral offence;

His financial and other interests are such that it hinders the smooth functioning of
the commission.

Terms of office of members and eligibility for reappointment

Every member will be in office for the time period as specified in the order of the
President, but is eligible for reappointment provided he has, by means of a letter
addressed to the president, resigned his office.

Salaries and allowances of the members

The members of the commission shall provide full-time or part-time service to the
commission, as the President specifies in his order. The members shall be paid
salaries and allowances as per the provisions made by the Central Government.
2. History of Finance Commission
As a federal nation, India suffers from both vertical and horizontal fiscal imbalances.
Vertical imbalances between the central and state governments result from states
incurring expenditures disproportionate to their sources of revenue, in the process of
fulfilling their responsibilities. However, states are better able to gauge the needs and
concerns of their inhabitants and therefore more efficient at addressing them. Horizontal
imbalances among state governments result from differing historical backgrounds or
resource endowments, and can widen over time.

The Finance Commission was established in 1951 by Dr. B.R. Ambedkar, the then-
incumbent law minister, to address these imbalances. Several provisions to bridge the
fiscal gap between the Centre and the States were already enshrined in the Constitution
of India, including Article 268, which facilitates levy of duties by the Centre but equips
the States to collect and retain the same. Similarly, Articles 269, 270, 275, 282 and 293,
among others, specify ways and means of sharing resources between the Union and
States. In addition to the above provisions, the finance commission serves as an
institutional framework to facilitate Centre-State Transfers.

Article 280 of the Indian Constitution defines the scope of the commission:

The President will constitute a finance commission within two years from the
commencement of the Constitution and thereafter at the end of every fifth year or
earlier, as the deemed necessary by him/her, which shall include a chairman and four
other members.3

Parliament may by law determine the requisite qualifications for appointment as

members of the commission and the procedure of selection.

The commission is constituted to make recommendations to the president about the

distribution of the net proceeds of taxes between the Union and States and also the
allocation of the same among the States themselves. It is also under the ambit of the
finance commission to define the financial relations between the Union and the States.
They also deal with the devolution of unplanned revenue resources.

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2.1. First Finance Commission
The First Finance Commission of India was appointed in 1951, for the period 1952-57 by
the President of India and was chaired by K. C. Neogy.

Members:

 Shri K. C. Neogy, Chairman

 Shri V. P. Menon
 Shri Justice R. Kaushalendra Rao
 Dr. B. K. Madan
 Shri M.V. Rangachari Member-Secretary
 Shri V. L. Mehta

V. P. Menon resigned on 18 February 1952 and was replaced by V. L. Mehta.

Terms of Reference:

The commission was asked to make recommendations regarding:

 Allocations of income tax and Union Excise Duties and tax sharing.
 Amounts payable as Grants- in-Aid to the States in need of Assistance under the
‘substantive portion of Clause 1 of Article 275’.
 Grants-in-Aid to certain States in lieu of their share of export duty on jute and jute
products according to Article 273
 Continuation or adjustment of the terms of agreement with Part B States under
Article 278 (1) or under Article 306.

Recommendations

The share of States in the proceeds of income tax was to be 55 per cent.

The First Commission recommended that shares of States in the Union excise duties be
40 per cent of the proceeds of the tax on three commodities, 25 per cent of the
proceeds of the tax on eight commodities and 20 per cent of the proceeds of the tax on
35 commodities, respectively.
 As far as Horizontal Distribution is concerned, overwhelming weightage is given to
Population (80%). Only residual weightage of 20% given to contribution.

No recommendations regarding grants for meeting capital requirements of the state

were made by the commission.

The Commission provided Grants in- Aid (under Article 273) to only four states,
namely, Assam Bihar, Orissa and West Bengal. However, Grants were provided to
many states under Substantive Portion of Article 275 (1) and under the head of
Primary education grants.

All recommendations made by the commission were accepted by the Union

Government.

2.2. Second Finance Commission

The Second Finance Commission of India was constituted by president Rajendra Prasad on 1
June 1956.

Members:

The members of the Commission were:

 Shri K. Santhanam, Chair

 Shri Ujjal Singh
 Shri L.S. Misra, Retired Chief Justice, Hyderabad
 Shri M.V. Rangachari
 Dr. B.N. Ganguli
 Shri H.B. Bhar, Secretary

Terms of Reference

The Commission was asked to make the following recommendations:

 Grants-in-Aid to certain States, in need of assistance under Article 275, having regard
to the requirements of Second Five Year Plan and the efforts made by those states to
raise additional revenue.
  Allocation of Estate Duty and Tax on Railway Passenger Fares proposed to be levied
by the Railway Passenger Fares Bill, 1957, introduced in the Lok Sabha on 15 May
1957.
 Grants-in-Aid to the States of Assam, Bihar, Orissa and West Bengal, to compensate
for their share of the export duty on jute and jute products as per Article 273.
 The principles which should govern the distribution under Article 269 of the net
proceeds of estate duty in respect of property other than agricultural land, levied by
the Government of India in the States within which such duty is leviable.
 Revisions, if any, of the rates of interest on loans made by the Centre to the States
between 15 August 1947 to 31 March 1956 and their terms of repayment. The
phenomenal growth of the Union loans to the States justified such adjustments.
 Apportionments of the net proceeds of the additional Excise Duties proposed to be
levied in view of States’ Sales Taxes on the mill-made textiles, sugar and tobacco, and
the amounts which should be assured to the States as the income now derived by them
from the levy on these commodities and the States Sales Tax (which is to be replaced
by the additional duty of excise).

Recommendations

With regard to the distribution of Income Tax, the Commission made the following
recommendations:

Despite the receding contribution by the Income Tax to the devolution of revenue to the
States, the Commission recommended an increase in the per cent of the net proceeds to the
States from 55 to 60, and the share of the Union Territories should be 1 per cent.

As far as the allocation to the States from the Union duties of excise on matches, tobacco,
vegetable products, tea, coffee, sugar, paper and vegetable non-essential oils was concerned,
the Commission considered that it should be 25 per cent.

2.3. Third Finance Commission

The Third Finance Commission of India was appointed in 1960, for the period 1960-64, by
the President of India and was chaired by Shri A.K. Chanda.
Members

Members of the Commission were:

 Shri A. K. Chanda, Chairman

 Shri Govinda Menon
 Shri Dwijendra Nath Roy (retired High Court Judge)
 Prof. M. V. Mathur
 Shri G. R. Kamat (Member Secretary)

Terms of Reference

The Commission was asked to make recommendations to the President with regard to the
following:-

 On account of Tax Sharing between the Centre and the State and allocation of Income
Tax and Central Excise Duties
 Under Article 275 of the Indian Constitution, Grants-in-Aid to States in need of
assistance, other than the sums specified in the provisos to Clause 1 of article 275
 With regard to the requirements of third five-year plan
 Secondly, with regard to the efforts to be made by those states to raise additional
revenue amount
 Allocation of duties, namely, additional excise duty and estate duty
 The manner of distribution of ad hoc Grants in-lieu of tax on Railway Passenger Fares
Recommendations

With regard to the terms of reference the following were the recommendations made by the
Finance Commission: -

The Finance Commission recommended the formulation of an independent commission to assess

the tax potential of each state, to review its tax structure and to recommend rates.

Income Tax

With regard to the divisible pool of income tax among the states the Finance Commission
 adopted the criterion of the first Finance Commission that 80% be distributed on the basis of
population and 20% on the basis of collection.
Union Excise Duty

With regard to the distribution of the proceeds of Union Excise Duty, the Finance
Commission decided to cover all commodities on the existing list. It recommended that 20%
of the net proceeds of Union Excise Duty on all commodities on which such duties were
collected and the yield of which exceeded Rs. 50 lakhs in 1960-61 should be allocated to the
state.

 Reliable data on consumption wasn’t available

 As it would have given advantage to the more urbanised and financially stronger
states.

Additional Duties of Excise

The central government in consultation with the state governments, decided that an
Additional Excise Duty be levied on mill-made textiles, sugar, tobacco, rayon among others
and the net proceeds of which should be distributed among them subject to then income
derived by each state being assured to it. The Commission rejected this contention as the rates
of sales taxes had been revised by them since then. The Commission distributed the
guaranteed amount of Rs. 32.54 crores among the States and the remaining amount was
distributed, first, on the basis of the percentage increase in the collection of sales tax in each
state since 1957- 58 when Additional Excise Duties were imposed and then on the basis of
the population.5

The Act imposing a tax on the railway passenger fares was repealed after the Third Finance
Commission had been constituted. Hence, the Commission was asked to make
recommendations on the principle on which the ad hoc grant should be distributed among the

states. The commission adopted the principle of compensation based on which the grants

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 should be distributed.

2.4. Fourth Finance Commission

The Fourth Finance Commission of India was constituted on May 18, 1964, under the
chairmanship of Dr. P. V. Rajamannar.

Members

The members of the Commission were:

 Dr. P. V. Rajamannar, Chairman

 Shri Mohan Lal Gautam
 Shri D.G. Karve
 Prof. Bhabatosh Datta
 Shri P.C. Mathew, Member Secretary

The Commission suggested in its report that there should be greater co-ordination between
the Centre and the States in common financial interests for which it recommended the
establishment of a permanent organization in the Ministry of Finance.

Recommendations

 Tax sharing and allocation of income tax and Union Excise Duties.
 Grants-in–aid to States in need of assistance, having regard to:
o The revenue resources of States for five years ending with 1970-1971 on the
basis of the levels of taxation likely to be reached at the end of 1965-66;
o Scope for economy with efficiency in States’ administrative expenditure.
 The changes to be made in the principles governing the distribution amongst the
States of the grant to be made available to the States in lieu of taxes on railway fares;
 To study the combined incidence of Sales Tax and Union Excise Duties on the
production, consumption or export of products, the duties on which are shareable with
the State.

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  The changes to be made in the principles governing the distribution of the net proceeds
in any financial year of the additional excise duties levied on commodities - namely
cotton fabrics, silk fabrics, woolen fabrics, sugar and tobacco - in replacement in the
States’ tax formerly levied by the state governments.

2.5. Fifth Finance Commission

The Fifth Finance Commission of India was constituted by the President of India, Dr. Zakir
Hussain, on March 15, 1968. The commission was chaired by Mahavir Tyagi.

Members

The members of the Commission were:

 Shri Mahavir Tyagi, Chair

 Shri P.C. Bhattacharyya, died during the term of the Commission
 Shri M. Seshachalapathy, retired Judge
 Dr. D. T. Lakdawala
 Shri V.L. Gidwani, Member Secretary
 Shri G. Swaminathan, joined on 21st February, 1969, in place of Shri P.C.
Bhattacharyya

Terms of Reference

The terms of reference of the Fifth Finance Commission were wider than those of the
previous commissions. Apart from the matters referred to in the earlier commissions, the fifth
commission was required to:

 Examine the desirability of maintaining existing arrangements in regard to additional

excise duties levied in lieu of Sales Tax and the scope for extension of such
arrangements to other items
 To inquire into the unauthorized overdrafts of the States and recommend the
procedure for avoiding such overdrafts
 Examine the scope for raising revenue from taxes and duties mentioned in Article 269
of the Constitution.
  Evaluate the scope in which States may raise additional revenue as well as to review
state economies in terms of fiscal management and provide a comprehensive study of
expenditures in various sectors.
 Evaluate grants-in-aid recommended under Article 275(1) which are to be for
purposes ‘other than the requirements of the Five Year Plan’ In addition, while
making its recommendations, the Commission was called upon to review “the
resources of the Central Government and the demands thereon” related to expenditure
on civil administration, defense, debt servicing, etc.
 The Commission was asked for the first time to indicate the basis of its findings and
make available relevant information. Since then transparency in commission findings
has been made clear in the Terms of Reference of every successive Finance
Commission.

2.6. Sixth Finance Commission

The Sixth Finance Commission of India was incorporated in the year 1973 consisting of Shri
K. Brahmananda Reddy as the chairman.

Members

The members of the Commission were:

 Shri K. Brahmananda Reddy, Chair

 Shri Justice Syed Sadat Abal Masud
 Dr. B.S. Minhas
 Dr. I.S. Gulati
 Shri G. Ramachandran, Member Secretary

Recommendations

 The States demanded the inclusion of corporation tax into the divisible income tax
and 1005 allocation of the net proceeds to them. The commission expressed that such
inclusion was constitutionally forbidden but it can be reviewed by National
Development Council.
 States share was increased from 75% to 80% due to the decrease in the divisible pool
as the arrears of the advance tax collection had been cleared
  In view of the increasing integration of the national economy and for eliminating the
regional imbalances the contribution factor was kept at 10% in the distribution of
share amongst the states. The distribution inter se the states should be on the basis of
fixed percentages
 Out of the net proceeds of the income tax, 1.79% should be allocated to the Union
Territories

2.7. Seventh Finance Commission

The Seventh Finance Commission of India was incorporated in 1978 consisting of Shri J. M.
Shelat as the chairman.

Members

The members of the Commission were:

 Shri J. M. Shelat, Chair

 Dr. Raj Krishna
 Dr. C. H. Hanumantha Rao
 Shri. H. N. Ray
 Shri. V. B. Eswaran, Member Secretary

Recommendations
 The inter se distribution between the states should include 10% contribution factor
and rest 90% would be on basis of population. The 10% allotment would be based on
the State-wise net assessments

2.8. Eighth Finance Commission

The Eighth Finance Commission of India was constituted by the President of India, on
April 28, 1984 under the chairmanship of Shri Y.B. Chavan.8

Members

The commission consisted of the following members:

 Shri Y.B. Chavan, Chair

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  Shri Justice Sabya Sachi Mukherjee, resigned during the term of the Commission
 Dr. C. H. Hanumantha Rao
 Shri G.C. Baveja
 Shri A.R. Shirali
 Shri Justice T.P.S. Chawla, in place of Sabya Sachi Mukherjee
 Shri N.V. Krishnan, Secretary

Terms of Reference

The Commission was asked to make recommendations on

 The distribution of net proceeds of taxes between the union and the states which are to
be or may be divided between them under chapter 1 of Part XII of the Constitution and
allocation between the states of the respective shares of the same
 The principles which govern the grants in aid of the revenues of the states out of the
Consolidated Fund of India and the amount to be paid to the needy States which seek
assistance by way of grants in aid of their revenues under Article 275 of the
Constitution for purposes other than those specified in the provisions to clause (i) of
that article
 The commission is to examine the possibility for increasing revenue from the taxes and
duties mentioned in Article 269 of the constitution but which are not levied at present.
It will probe into the scope for enhancing revenue from the duties mentioned in the
Article 268. Making an assessment of the non plan capital gap of the states on a
uniform and comparable basis for the 5 years ending with 1988-89 also comes under
its agenda. It will review the policy and arrangement in regards to the financing of
relief expenditure by the States affected by natural calamities and make appropriate
suggestions. The commission shall make its report by October 31, 1986 on each of the
matters aforesaid.
 The major objective of the Eighth Finance Commission was to reduce interstate
disparities through their scheme of devolution.
Recommendations

 Sharing of Income Tax – To retain the share of the States in the proceeds of the
income tax at 85% level. Withdrawal of surcharge on income tax from the financial
year 1985-86 is also recommended
 Union Excise Duties – Recommended its increase from 40% to 45%. It made a
beginning by using one unified formula to distribute the net yield from Union Excise
Duties and 90% share of the income tax
 Additional Excise Duties – The distribution from the net yield from additional duties
of the excise was made 50% on the basis of the share of each state in the average state
domestic products of all the states for the years from 1976-1977 to 1978-1979 and
50% on the basis of the population figures as given in 1971 Census
 Grants in Lieu of tax on railway passenger fare – It has boldly defended the case of
the state government in regard to their claim on the tax on railway fair. The
compensatory grant which replaced the tax was increased to Rs. 95 crores

2.9. Ninth Finance Commission

The Ninth Finance Commission of India was set up in June 1987 under the chairmanship of
Mr. N.K.P Salve.

Members

The members of the Commission were:

 Shri N.K.P. Salve, Chair

 Shri Justice Abdus Sattar Qureshi
 Dr. Raja J. Chelliah
 Shri Lal Thanhawla, resigned on 24 January 1989

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  Shri Mahesh Prasad, Member Secretary, resigned during the term of the
Commission
 Shri S. Venkitaramanan, joined in place of Shri Lal Thanhawla on 3 May 1989
 Shri Venkitaramanan, resigned as Member of the Finance Commission on his
appointment as Adviser to the Government of Karnataka
 Shri R. Keishing, assumed charge as part-time Member of the Commission with
effect from 25 November 1989.
 Shri K.V.R. Nair, appointed as Member Secretary in place of Shri Mahesh Prasad
from 13 July 1989

Terms of Reference

 The Commission was asked to adopt a normative approach in assessing the receipts
and the expenditures on the revenue account not only of the states but also of the
centre with due regard to the special problems of each state and the special
requirement of the central government. Generating surpluses on revenue account of
both the states and centre for capital investment should also be considered. Changes
in the principles that govern the distribution between the union and the states and
also the states inter-se of the net proceeds of central taxes are to be made
 The commission will also make recommendations regarding the principles which
should govern the grants in aid of the revenue of the state out of the Consolidated
Fund of India. It is to assess the debt position of the states as on 31 March 1989 and
suggest corrective measures. In regard to the financing of the relief expenditure by
the states affected by natural calamities the commission is to examine the feasibility
of establishing a National Insurance Fund to which the state governments may
contribute a percentage of their revenue receipts. The government's decision to
accept all the major recommendations of this commission which would bring
substantial benefits to the state during the eighth five-year plan period (especially in
relation to debt relief) shows the upper hand enjoyed by this body.

Recommendations

 Income Tax – 85% of the divisible pool of the income tax to be assigned to the state
and out of the net distributable proceeds a sum equal to 1.437% should be deemed
to represent the proceeds attributable to the Union Territories.
  Relief Funds – The existing arrangements to be replaced by a new order under
which the states will have greater autonomy and accountability. A calamity relief
fund to be constituted for each state to which contribution is to be made in the ratio
75:25 (centre: state).
 Debt Relief – The Commission recommended that the Reserve Bank of India may
work out a formula for amortization of the states’ market borrowings. From 1990 to
1991 the direct central loans for states’ plans should have a maturity period of 20
years with 50% of the loans enjoying a grace period of 5 years. The loans given to
the federating states for drought relief during 1986–89 as outstanding on 31 March
1989 are to be waived. The state plan loans advance to the states during the 1984–
89 period and outstanding on 31 March 1990 should be consolidated, rescheduled to
15 years in the case of all the states.

2.10. Tenth Finance Commission

The Tenth Finance Commission of India was incorporated in the year 1995 consisting of Shri
Krishna Chandra Pant as the Chairman.

Members

The members of the Commission were:

 Shri Krishna Chandra Pant, Chair

 Dr. Debi Prasad Pal, Member of Parliament
 Shri B.P.R. Vithal
 Dr. C. Rangarajan, resigned on 21 December 1992
 Shri M.C. Gupta, Member Secretary, relinquished charge on 31 January 1994
 Shri Manu R. Shroff, In place of Dr. C. Rangarajan on 14 October 1993
 Shri Arun Sinha, Member Secretary (in place of M.C. Gupta) on 1 March 1994

Recommendations

 The share of the Union Territories would not be determined on the grounds used for
state share but it would be decided on the basis of population solely. The percentage
would be 0.927% for the years 1995-2000.
  Out of the total income obtained from certain central taxes and duties, 29% should go
to the states. This is known as the 'Alternative Scheme of Devolution' and came into
effect retrospectively from April 1, 1996.
 The proceeds from the ‘penalties’ and ‘interest recovered’ under the miscellaneous
receipts should be included in to the divisible income tax pool as recommended by
Ninth Commission with effect from 1 April 1995.
 The share of the net proceeds would be 77.5% for five years.
 The commission dropped the collection factor as the criterion for distribution
 The distribution of the net proceeds among states would be as follows:-
o 20% on the basis of population of 1971
o 60% on basis of distance of per capita income
o 5% on basis of area adjusted
o 5% on basis of infrastructure index
o 10% on basis of tax effort

2.11. Eleventh Finance Commission

The Eleventh Finance Commission of India was appointed by the President on July 3, 1998
for the period 2000-2005.

Members

 Prof. A.M. Khusro, Chair

 Shri N.C Jain
 Shri J.C Jetly, IAS (retired)
 Dr. Amaresh Bagchi
 Shri T.N. Srivastava, IAS, Member Secretary.

Terms of Reference

The Commission was asked to make recommendations to the President with regard to the
following:-

 With regard to Chapter I of Part XII of the Constitution, the distribution between the
Centre and the States of the net proceeds of taxes and the allocation between the
States of the shares of these proceeds

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  The principles governing the grants-in-aid of the revenues of the States out of the
Consolidated Fund of India and with regard to Article 275 of the Constitution - the
sums to be paid to the States which are in need of assistance by way of grants-in-aid
of their revenues for purposes other than those specified in the provisos to clause (1)
of that article;
 With regard to the recommendations made by the Finance Commission of the State;
the measures needed to augment the Consolidated Fund of a State to supplement the
resources of the Panchayats and Municipalities in the State
 Suggestions for a restructuring of the public finances so as to restore budgetary
balance and maintain macro-economic stability.

Recommendations

With regard to the terms of reference the following were the recommendations made by the
Commission:

 The total share of the States in the net proceeds of central taxes and duties would be
29.5% for the next five years
 With regard to the revenue deficit grants to States, a lumpsum amount of Rs. 11,000
crore in the Central Budget 2000-2001.

Grants

 For the five years commencing from April 1, 2000, Rs.4,972.63 crore be given for
upgrading of standards of administration and specific grants to certain States for
special problems.
 For the five years commencing from April 1, 2000, Rs.10,000 crore for local bodies,
to be directed for maintenance of civic services, Rs.1600 crore per annum is for rural
local bodies and Rs.400 crore per annum is for urban local bodies.
 With reference to the Grants-in-Aid under Article 275 (1) of the Constitution, which
amounts to a total of Rs. 35359 crore for the period 2000-2005 to be provided to such
States (15 States) which will have deficit non-plan revenue account even after the
devolution of central tax revenues, equal to the amount of deficits were assessed.

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 The tax devolution from the Centre to the State should not exceed 37.5% of total
Centre’s revenues this should be inclusive of the Central taxes/duties to States
and grants-in-aid to States.
 The Commission recommended that each State be given a share as specified the net
proceeds of all shareable union taxes and duties except the expenditure tax and
service tax.

2.12. Twelfth Finance Commission

The Twelfth Finance Commission of India was appointed on 1 November 2002 to make
recommendations on the distribution of net proceeds of sharable taxes between union and
states. The commission was headed by veteran economist of India, C. Rangarajan. The
commission submitted its report on 30 November 2004 and covered the period from 2005-
10.13

Members

The members of the Commission were:

 Dr. C. Rangarajan, Chair

 Shri T.R Prasad, IAS (retired)
 Prof. D.K Srivastava
 Shri Som Pal, Part time Member, resigned 14 May 2004
 Dr. Shankar N. Acharya, Part time Member, replacing Som Pal from 2 July 2004

Terms of reference

The commission was asked to make recommendations on the following matters:

 The distribution of net proceed of taxes between union and states which are to be
divided under chapter 1 part 12 of the constitution.
 The policies required to increase the consolidated fund of states on the basis of
recommendation made by the finance commission of states to supplement the
resources of municipalities and panchayats in the state.

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 In making the recommendation, the commission was asked to pay regard to

 The resources of the union government and state government for five years starting
from 1 April 2005 on the basis of the total tax and non-tax that it will likely to receive
by the end of 2003-04.
 The demand of the resources by the central government,in particular the need of
expenditure on civil administration,internal security, defence, debt servicing and other
committed expenditure and liabilities.

Recommendations

 Macro-economic stability - The total fiscal deficit for Centre & states to be reduced to
3% of GDP and the total tax-GDP ratio of both centre& states to be increased to
17.6% of GDP in 2009-10. The revenue deficit for the centre& states combined to be
reduced to 0% by 2008....
 Distribution of Union Tax - The total share of states in the total sharable central taxes
to be fixed at 30.5% and the share of states will come down to 29.5% if the states levy
sales tax on sugar, textiles and tobacco.
 Grants to local bodies - The total grant that will have to be given to the states for
panchayati raj institutions and local urban bodies for the period of 2005-09 will be Rs
20000 crores and Rs 5000 crores respectively.
 Calamity Relief Fund - The calamity relief fund scheme will continue as it was in the
previous plans with central & states contributing in the ratio of 75: 25. The size of
fund will be Rs 21333 crore for the period of 2005-10.
 Grant in aids to the states - For the period of 2005-10, the total non-plan revenue
deficit grant of Rs 56856 crores is recommended to 15 states and the total grant of Rs
10172 is recommended for 8 educationally backward states. A grant of Rs 15000
crores is recommended for building roads and bridges which is in addition to the
normal expenditure of the states while the grants that are recommended to the states
for maintenance of public buildings, forests, heritage conservation and specific needs
of states are Rs 500 crore, Rs 100 crore, Rs 625 crore and Rs 7100 crore14.

2.13. Thirteenth Finance Commission

The Thirteenth Finance Commission of India was constituted by the President of India under

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 the chairmanship of Vijay L. Kelkar on 13 November 2007.

Members:


 Dr. Vijay L. Kelkar, Chairman

 Shri B.K. Chaturvedi, Part-time
 Dr. Indira Rajaraman
 Prof. Atul Sarma
 Dr. Sanjiv Misra
 Shri Sumit Bose, Secretary

Recommendations:

The major recommendations of the Commission were:

 The share of states in the net proceeds of the shareable Central taxes should be 32%.
This is 1.5 percentage-points higher than the recommendation of the 12th
Commission.
 Revenue deficit to be progressively reduced and eliminated, followed by revenue
surplus by 2013–2014.
 Fiscal deficit to be reduced to 3% of the gross domestic product (GDP) by 2014–
2015.
 A target of 68% of GDP for the combined debt of centre and states.
 The Medium Term Fiscal Plan (MTFP) should be reformed and made the statement of
commitment rather than a statement of intent.
 Fiscal Responsibility and Budget Management Act, 2003 need to be amended to
mention the nature of shocks which shall require targets relaxation.
 Both centre and states should conclude 'Grand Bargain' to implement the model
Goods and Services Act (GST). To incentivise the states, the commission
recommended a sanction of the grant of Rs500 billion.
 Initiatives to reduce the number of Central Sponsored Schemes (CSS) and to restore
the predominance of formula-based plan grants.
 States need to address the problem of losses in the power sector in time bound
 manner.

2.14. Fourteenth Finance Commission16

The Fourteenth Finance Commission of India was a finance commission constituted on 2nd
January 2013. The commission's chairman was former Reserve Bank of India governor Y. V.
Reddy and its members were Sushma Nath, M. Govinda Rao, Abhijit Sen, Sudipto Mundle,
and AN Jha. The recommendations of the commission entered force on April 2015; they take
effect for a five-year period from that date.

Recommendations

Sharing of Union tax revenues with states

Transfers from Union to states consist of tax devolution, non-Plan grants, Plan grants and
grants for various Cental Supported Schems (CSS) including those which were transferred
directly to the implementing agencies bypassing the budget.
Area

The commission followed the method adopted by the 12th commission and put the floor limit
at 2 percent for smaller States and assigned 15 percent weight.

Forest cover

The commission assigned 7.5 per cent weight to forest cover as the new criteria to balance
the benefit of the huge ecological benefits and the opportunity cost in terms of area not
available for other economic activities that becomes indicator of fiscal disability.
Population

The commission felt that allocation based on dated population data is unfair, and assigned a
17.5 percent weight to the 1971 population and assigned 10 percent a weight to the 2011
population to capture the demographic changes since 1971, both in terms of migration and
age structure.

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Fiscal Plan

Devolution to special States

 1.94 lakh Crores is to be used as the post devolution revenue deficit grant for the 11
states with gaping Revenue Deficits.
 Fiscal Deficit is to be reduced to 3% of GDP, Revenue Deficit to be 0% by 2017.
 Medium term fiscal plan(MTFP) is to be the statement of commitment instead of the
statement of intent.
 A target of 62% of GDP is to be set for the combined debt of center and states. This is
improvement over the 68% set by the previous commission.
 States are to be eligible for an additional borrowing limit of 0.25% of GSDP.
 The current FRBM Act is to be amended to explain the nature of shocks which
require relaxation from the target and to be merged with a Debt ceiling and Fiscal
responsibility Act.
 Actions to address the less fiscal space with the center.
 An independent council is to be setup to assess the fiscal policy implications.
 Inter state council to be expanded for co-operative federalism to identify sector
specific grants to states.
 Initiatives to reduce 30 central sponsored schemes. The central government has
accepted 8 of them.

Good and Services Tax (GST)

The commission recommended the Union to establish GST compensation fund. This
compensation is to be used to address 100% of the shortfall in the first year, 75% in the
second year and 50% in the third year. This additional fiscal burden on the Union government
has to be taken as investment to get yields in the medium and long run.17

National Disaster Relief Fund

The financing of the NDRF had been from levying cess on some selected items and some of
them will be subsumed by GST. The commission recommended the Union Government to
ensure an assured source of funding. The commission recommended to consider tax

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 exemption to private contributions to the NDRF.

 The commission recommended to review the reimbursement of expenditure incurred

by the defense forces to not hinder their efficiency during disaster relief.
 The commission recommended the Union Government to expedite the development
and scientific validation of the Hazard Vulnerability Risk Profiles of States.
 The commission recommended to keep an aggregate corpus for all States of Rs.
61,219 crore for the five years based on the expenditure from the past years. The
commission recommended all States to contribute 10 per cent and Union with the
remaining 90 per cent. Considering the need for regard to state-specific disasters, the
commission recommended that up to 10 per cent of the funds available under the
SDRF can be used by States for natural disasters that they consider to be 'disasters'
within the local context in the State and which are not included in the notified list of
disasters of the Ministry of Home Affairs.

Public Utilities

Power

 The commission recommended that 100 per cent metering be achieved in a time-
bound manner for all electricity consumers.
 The Electricity Act, 2003, currently does not have any provision of penalties for
delays in the payment of subsidies by State Governments. The commission
recommended that the Act be suitably amended to facilitate levy of such penalties.
 Electricity Act allows a State Electricity Regulatory Commission Fund by State
Governments, to enable the SERCs to perform their responsibilities. The commsion
recommended all States to setup SERC Fund, as statutorily provided.
 Water Supply

The commission recommended all States to setup Water regulation authority (WRA) to set
up pricing of water for domestic, irrigation and other uses. It recommended all States to
invest in volumetric measurement of the use of irrigation water. It also recommended the
States and local bodies to progressively move towards 100 per cent metering of water and to
complete metering by 2017 with the cost to be borne by the consumers. The commission
recommended to give new connections in urban bodies only when the functioning meters are
setup.

Public Sector Companies

 The commission recommended that a Financial Sector Public Enterprises Committee

be appointed to examine and recommend parameters for appropriate future fiscal
support to financial sector public enterprises, recognizing the regulatory needs and the
multiplicity of units in each activity.
 The commission recommended to categorize public sector companies as high, low
and non priority to decide current policy and future course of action.
 The commission recommended to wind up the National Investment Fund and to keep
all the receipts from disinvestment to be kept with the Consolidated Fund of India.
 3. Fifteenth Finance Commission
The Fifteenth Finance Commission was constituted by the Government of India—after
getting ceremonial approval from the President of India—through a notification in The
Gazette of India. Nand Kishore Singh was appointed as the commission's chairman, with its
full-time members being Shaktikanta Das and Anoop Singh and its part-time members being
Ramesh Chand and Ashok Lahiri.

The commission held its first meeting on 4 December 2017. Lahiri was elevated to the status
of a full-time member in May 2018 and was accorded the status of a minister of state.18

Members

1. Nand Kishore Singh (Chairman): Retired Indian Administrative Service (IAS) officer.
Served as the Union Revenue Secretary, Union Economic Affairs Secretary and Union
Expenditure Secretary. Also served as a member of the erstwhile Planning Commission. Post-
retirement, served a member of parliament in the Rajya Sabha (Council of States) for the state
of Bihar. He has been a senior member of the Bharatiya Janata Party (BJP) since March 2014.

2. Shaktikanta Das (Member): Retired IAS officer. Served as the Union Economic Affairs
Secretary, and as the Union Revenue Secretary. Also served as Special Commissioner
(Revenue) and Secretary (Revenue) in the state of Tamil Nadu.

3. Prof. (Dr.) Anoop Singh (Member): An adjunct professor at Georgetown University,

Washington, D.C. Also served as the International Monetary Fund's director its Regional
Office of Asia and the Pacific (OAP).

4. Dr. Ashok Lahiri (Member): Former Chief Economic Advisor to the Government of
India, also served as the chairperson of Bandhan Bank.

5. Prof. (Dr.) Ramesh Chand (Member- part-time): A member of the NITI Aayog, a
fellow of National Academy of Agricultural Sciences and Indian Society of Agricultural
Economics. Also served as the director of the National Institute of Agricultural Economics
and Policy Research (ICAR-NIAP).

18
^ : "Constitution of Fifteenth Finance Commission Notified". Press Information Bureau of India. 27 November
2018.
Aims

The commission was set up to give recommendations for devolution of taxes and.other fiscal
matters for five fiscal years, commencing on 1 April 2020. The main tasks of the commission
were to "strengthen cooperative federalism, improve the quality of public spending and help
protect fiscal stability". Some newspapers like The Hindu and The Economic Times noted
that commission's job was made harder because of the rollout of goods and service tax (GST)
regime in India, as, it had taken certain powers concerning taxation away from the union and
the states, and, had given them to the newly formed GST Council. The peer-reviewed journal,

Economic and Political Weekly further noted that even after the passage of the Fiscal
Responsibility and Budget Management Act, 2003, some states still incur revenue deficits,
so, the commission would have to either recommend the disbandment of revenue deficit
grants, or, would have to recommend ways for further fiscal consolidation.

The commission's chairman, N. K. Singh, said that the commission would need to define
populism, as, the commission's 'terms of reference' (ToR) had a provision for rewarding
states, which were successful in eliminating or reducing expenditure incurred on populist
schemes. Singh added that the commission would need to reappraise the formula of
devolution of revenue through the union's taxes, because of a provision in its ToR. Singh
further said, in a lecture to Indian Institute of Management Ahmedabad students, that one of
the commission's challenges was to find a balance between equity and efficiency, adding that
urban and rural local bodies—the constitutionally-mandated third-tier of government in
India—needed to be further empowered to stimulate added economic growth.

The Chief Economic Adviser to the Government of India, Arvind Subramanian, said that the
commission may need to function like the first finance commission because of an increased
decentralisation and change in India; further suggesting to divide the tax devolution system
into four pots – "return", "redistribution", "risk sharing" and "reward", while also saying that
tax devolution was no more a north-south issue. However, Subramanian's ideas were opposed
by Pinaki Chakraborty, a professor at the National Institute of Public Finance and Policy
(NIPFP) and a member of the Fifteenth Finance Commission's advisory council, who said
that having a division of tax devolution into four pots would violate "the objective of
offsetting revenue disabilities."
Demands

At its first interaction with members of parliament (MPs), the commission was asked by
some MPs to recommend a plan on compensating states which suffered revenue losses after
the rollout of GST. Some parliamentarians also asked the commission to reassess the criteria
of classifying a state as 'backwards'.

The president of Nationalist Congress Party (NCP), Sharad Pawar, suggested the
commission to create a financial buffer against oil prices. Whereas, the chief minister of
Bihar and Janata Dal (United) (JD(U)) president and convener, Nitish Kumar—in a letter to
the commission's chairman, N. K. Singh—asked the commission to revisit the criterion of
the target of a maximum 3% fiscal deficit under the Fiscal Responsibility and Budget
Management Act, 2003, calling it "iniquitous". Singh added, that the state was still waiting
for special financial allocations promised to it under the Bihar Reorganisation Act, 2000.

The commission, on its visit to the state, was asked by the Government of West Bengal to
look into restructuring the state's debt, so that it doesn't become "a permanent drag on the
economy of Bengal"; the state's chief minister and All India Trinamool Congress (AITC)
chairperson, convener and president, Mamata Banerjee, said in a press conference, that "we
expect that Finance Commission will consider our demand for debt restructuring or
waiver…". West Bengal government further suggested an alternative devolution formula
based on factors like social backwardness, locational complexities and continuation of
revenue deficits to the commission.

The commission was asked by several state governments to increase states' share in union's
tax devolution from the existing 42% to 50%. Whereas, the Government of India asked the
commission to review a 10% hike from 32% to 42% in tax devolution given to states by the
Fourteenth Finance Commission, with Union Minister of Finance, Arun Jaitley, saying that
"India is a Union of states, the Union also has to survive"19

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4. Conclusion
The terms of Reference and the matters that shall be taken into consideration by the Fifteenth
Finance Commission in making the recommendations are as under:

(i) The distribution between the Union and the States of the net proceeds of taxes
which are to be, or may be, divided between them under Chapter I, Part XII of the
Constitution and the allocation between the States of the respective shares of such
proceeds;
(ii) The principles which should govern the grants-in-aid of the revenues of the States
out of the Consolidated Fund of India and the sums to be paid to the States by way
of grants-in-aid of their revenues under Article 275 of the Constitution for
purposes other than those specified in the provisos to clause (1) of that article; and

(iii) 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.

2. The Commission shall review the current status of the finance, deficit, debt levels, cash
balances and fiscal discipline efforts of the Union and the States, and recommend a fiscal
consolidation roadmap for sound fiscal management, taking into account the
responsibility of the Central Government and State Governments to adhere to appropriate
levels of general and consolidated government debt and deficit levels, while fostering
higher inclusive growth in the country, guided by the principles of equity, efficiency and
transparency. The Commission may also examine whether revenue deficit grants be
provided at all.20

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3. While making its recommendations, the Commission shall have regard, among other
considerations, to:

(i) 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. In the context of both tax and non-tax revenues, the
Commission will also take into consideration their potential and fiscal capacity;

(ii) The demand on the resources of the Central Government particularly on account of
defence, internal security, infrastructure, railways, climate change, commitments towards
administration of UTs without legislature, and other committed expenditure and
liabilities;

(iii) The demand on the resources of the State Governments, particularly on account of
financing socioeconomic development and critical infrastructure, assets maintenance
expenditure, balanced regional development and impact of the debt and liabilities of their
public utilities;

(iv) The impact on the fiscal situation of the Union Government of substantially enhanced
tax devolution to States following recommendations of the 14th Finance Commission,
coupled with the continuing imperative of the national development programme including
New India – 2022;

(v) The impact of the GST, including payment of compensation for possible loss of
revenues for 5 years, and abolition of a number of cesses, earmarking thereof for
compensation and other structural reforms programme, on the finances of Centre and
States; and;

(vi) The conditions that GoI may impose on the States while providing consent under
Article 293(3) of the Constitution.

4. The Commission may consider proposing measurable performance-based incentives

for States, at the appropriate level of government, in following areas:

(i) Efforts made by the States in expansion and deepening of tax net under GST;

(ii) Efforts and Progress made in moving towards replacement rate of population growth;
(iii) Achievements in implementation of flagship schemes of Government of India,
disaster resilient infrastructure, sustainable development goals, and quality of
expenditure;

(iv) Progress made in increasing capital expenditure, eliminating losses of power sector,
and improving the quality of such expenditure in generating future income streams;

(v) Progress made in increasing tax/non-tax revenues, promoting savings by adoption of

Direct Benefit Transfers and Public Finance Management System, promoting digital
economy and removing layers between the government and the beneficiaries;

(vi) Progress made in promoting ease of doing business by effecting related policy and
regulatory changes and promoting labour intensive growth;

(vii) Provision of grants in aid to local bodies for basic services, including quality human
resources, and implementation of performance grant system in improving delivery of
services;

(viii) Control or lack of it in incurring expenditure on populist measures; and

(ix) Progress made in sanitation, solid waste management and bringing in behavioural
change to end open defecation.

5. The Commission shall use the population data of 2011 while making its
recommendations.

6. The Commission may review the present arrangements on financing Disaster

Management initiatives, with reference to the funds constituted under the Disaster
Management Act, 2005 (53 of 2005), and make appropriate recommendations thereon.

7. The Commission shall indicate the basis on which it has arrived at its findings and
make available the State wise estimates of receipts and expenditure.

8. The Commission shall make its report available by 30th October, 2019, covering a
period of five years commencing 1st April, 2020.
5.References

1. www.economictimes.indiantimes.com

2. www.economariya.com

3. www.financialexpress.com

4. Pib.gov.in

5. Constitution of India by VN Shukla

6. https://fincomindia.nic.in/

7. https://www.prsindia.org/report-summaries/fourteenth-finance-commission-report

8. www.economictimes.com

9. www.economicexpress.com

10. www.wxxinews.org

11. THE FINANCE COMMISSION (MISCELLANEOUS PROVISIONS) ACT, 1951 ACT NO. 33 OF
1951