IAS Rank

15th Finance Commission Report FY 2020-21 All you need to know for UPSC CSE.

What is the Finance Commission and Its Purpose?

Article 280 of the Constitution states that the President of India shall constitute a Finance Commission which should consist of a chairman and 4 other members (Total – 05) at the expiration of every fifth year or at such earlier time as the President considers necessary.

According to article 280 of the Indian Constitution the Finance Commission is a quasi-judicial body i.e. its recommendations are only of advisory nature and hence, not binding on the government.

Main purpose of FC is to make recommendations to the president of India in following matters:

Members of 15th Finance Commission.

Members of 15th Finance Commission.

 NOTE: As Mr. Shaktikanta Das, IAS became New RBI governor hence Mr. Ajay Narayan Jha, IAS have replaced himin the members of Finance Commission.

Why in News?

Recently, the Fifteenth Finance Commission submitted its report with recommendations for the financial year 2020-21.

15th Finance Commission needs to submit two reports:

15th FC was to submit its report for period 2020-2025. However, its term was extended last year in November 2019. Due to some following reasons committee didn’t got satisfactory result:

Apart from present interim report, FC will be submitting its second  report  for  2021-22  to  2025-26  in October

However, the commission have increased the disaster relief as well as revenue deficit grant to states and brought back the performance-based incentives for states undertaking agriculture reforms and reduction in pollution. The Constitution anticipates the Finance Commission as the balancing wheel of fiscal federalism in India.

The commission highlighted some challenges with the implementation of the Goods and Services Tax (GST):

Formula that decides a state-wise share:

Share of States 15th Finance Commission

Key Recommendations of the 15th FC Report (2020-2021):

Following the recommendations, the Finance Minister Ms Nirmala Sitharaman said in her budget speech that states formulating and implementing plans for ensuring cleaner air in cities with a population of more than one million would be encouraged.

Exit mobile version