The 15th Finance Commission to recommend on the sharing of revenue between the Centre and states for a five-year period was constituted by the government on Monday, according to an official statement.
The Union Cabinet had, last week, approved the constitution of the 15th Finance Commission, whose recommendations have to be in place by April 1, 2020, and decided to finalise its terms of reference.
“The Government of India, with the approval of President of India, has constituted Fifteenth Finance Commission,” a Finance Ministry release said here.
The Commission will be headed by former Union Secretary and ex-MP NK.Singh. Other members include former Economic Affairs Secretary Shaktikanta Das and Anoop Singh, who is adjunct professor at Georgetown University in the US.
“Ashok Lahiri, Chairman (non-executive, part time), Bandhan Bank and Ramesh Chand, Member, NITI Aayog shall be the part time members of the Commission. Arvind Mehta shall be the Secretary to the Commission,” the statement said.
“The terms of reference of the Commission has been issued vide notification,” it added.
The 14th Finance Commission’s recommendations expire on March 31, 2020, while the formation of the fifteenth one comes in the backdrop of a radical overhaul of the indirect tax regime by way of the Goods and Services Tax (GST) from July 1.
Announcing the cabinet decision, Finance Minister Arun Jaitley told reporters here last week that while there is a continuity in the expenditure pattern of the Centre and the states, the GST was a new element in the revenue situation.
“The impact of GST on revenue will have to be studied by the new Finance Commission. After GST, the indirect tax regime is no longer the same for both the Centre and states,” he said.
The 14th Finance Commission recommended transfer of a much bigger share of central taxes to states, increasing it by 10 percentage points to 42 per cent, which was accepted by the Centre. Former Reserve Bank of India Governor Y.V. Reddy headed the 14th Finance Commission constituted under the previous United Progressive Alliance government.
The Finance Commission is set up around two years before the end of the previous five-year period.