The 15th Finance Commission on Thursday submitted its interim report on devolution formula for the financial year 2020-21 to President Ram Nath Kovind.
The devolution formula spells out how the Centre plans to share the taxes collected by it with the States. Since, the formula is to be applied in the new Budget, the award has not been made public. However, it is believed that the devolution could be less than the 42 per cent prescribed by 14th Finance Commission. Normally, the government accepts the award in toto, however, it is free to accept or reject other suggestions in the report.
A government statement said that Chairman of the 15th Finance Commission NK Singh along with Members comprising Ajay Narayan Jha, Ashok Lahiri, Ramesh Chand, Anoop Singh and Secretary Arvind Mehta called on the President and submitted the report for the financial year 2020-21. “The Commission apprised the President of the recommendations contained therein,” it said.
Now, the report will first be studied and then a final view will be taken by the Cabinet following which it will be tabled in Parliament just before the Union Budget next year. Only after that will the contents be made public.
The 15th Finance Commission was constituted by the President under Article 280 of the Constitution on November 27, 2017 to make recommendations for a five-year period from April 1, 2020 to March 31, 2025. The Commission had a wide ranging Terms of Reference (ToR) contained in the Presidential Notification.
Last month after a Cabinet decision, the Gazette Notification dated November 27 mandated the Commission to submit the report for the financial year 2020-21 by November 30, 2019 and then the final report for the period April 1, 2021 to March 31, 2026 by October 30, 2020.
This has been necessitated after Article 370 of the Constitution was amended. Following this the State of Jammu & Kashmir was bifurcated into two Union Territories, Jammu & Kashmir and Ladakh. Since the Finance Commission’s recommendation on devolution is meant only for the States and as Jammu & Kashmir ceased to be a State, there was a need to change the terms of reference.
Also, the Section 83 of the Jammu and Kashmir Reorganisation Act, 2019 reads: “On the appointed day, the President shall make a reference to the Fifteenth Finance Commission to include Union territory of Jammu and Kashmir in its Terms of Reference and make award for the successor Union Territory of Jammu and Kashmir.” Normally, grants for a Union Territory are provided by the Home Ministry.
All these necessitated for extension of the term and submission of interim report first and final one later.
The last time an interim report was submitted was during the term of 11th Finance Commission (2000-05), when the new States of Jharkhand, Uttarakhand and Chhattisgarh were created