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Fifteenth Finance Commission

Topics Covered: Appointment to various Constitutional posts, powers, functions and responsibilities of various Constitutional Bodies.

Fifteenth Finance Commission:


Context:

The Fifteenth Finance Commission led by Chairman N K Singh, submitted its Report to the President of India.

  • The Report will be available in the public domain once it is tabled in the Parliament by the Union Government.

Background:

The Finance Commission was required to submit two reports. The first report, consisting of recommendations for the financial year 2020-21, was tabled in Parliament.

Terms of reference (ToR):

  1. The Commission was asked to give its recommendations on many unique and wide-ranging issues in its terms of reference.
  2. Apart from the vertical and horizontal tax devolution, local government grants, disaster management grant, the Commission was also asked to examine and recommend performance incentives for States in many areas like power sector, adoption of DBT, solid waste management etc.
  3. The Commission was also asked to examine whether a separate mechanism for funding of defence and internal security ought to be set up and if so how such a mechanism could be operationalised.

What is the Finance Commission?

The Finance Commission is a constitutionally mandated body that is at the centre of fiscal federalism.

  • Set up under Article 280 of the Constitution, its core responsibility is to evaluate the state of finances of the Union and State Governments, recommend the sharing of taxes between them, lay down the principles determining the distribution of these taxes among States.

InstaLinks:

Prelims Link:

  1. FC- composition.
  2. Functions of FC.
  3. Appointment of members and constitution of FC.
  4. Types of FC grants.
  5. Formula used by 15th finance commission.

Mains Link:

Give an account of the composition and functions of the Finance Commission as mentioned in the Constitution of India.

Sources: PIB.