The Union Cabinet approved the extension of the term of the Fifteenth Finance Commission to submit its report, setting 30 October 2020 as the new deadline. The Commission will now present the final report covering financial years 2021-22 to 2025-26.
- It will enable the Commission to examine various comparable estimates for financial projections in view of reforms and the new realities.
- It will help medium-term resource planning for the state governments and the center.
- It will help both state and central governments design schemes with medium- to long-term financial perspective.
- It will provide adequate time for mid-course evaluation and correction.
- The impact of the economic reforms initiated in the current financial year would be manifested in the data.
Possible cause of the extension:
- Difficulties in projections due to economic uncertainties.
- The commission couldn’t do the detailed assessments of Maharashtra and Haryana due to the Model Code of Conduct.
- The bifurcation of Jammu and Kashmir and change in its status to a union territory (UT) have necessitated the extension. Finances for a UT go from the center’s kitty.
- The wide-ranging terms of reference require a Comprehensive examination of implications and aligning them to the requirements of the states and the central government.
- Finance Commission sought leverage with the Goods and Services Tax (GST) Council. The Finance Commission looks at projections of revenue and spending. GST rates exemptions, changes, and implementation are the domain of the GST Council.
Also read: The Fifteenth Finance Commission And GST Issues
