Laying the ground work for fresh fiscal relations between the Centre and the states, the Fourteenth Finance Commission submitted its report on Monday.
“The Fourteenth Finance Commission today submitted its report for the period April 1, 2015, to March 31, 2020,” said an official statement, adding that it would now be placed before the President.
Its report will be a key input in the preparation of the Union Budget 2015-16.
However, breaking from tradition, the report is likely to be tabled in the ongoing Winter session of Parliament.
“This will help states understand how much revenue they will receive from the Centre and accordingly allow them to finalise their own Budgets,” said a person privy to the development. In the past, the report of the finance commission was usually tabled in the Budget Session of Parliament.
The Fourteenth finance commission, led by former Reserve Bank of India governor YV Reddy was mandated to devolve a fresh formula for sharing of taxes between the Centre and states. It is expected to have suggested enhancing the states’ share in Central taxes, in tune with the NDA government’s focus to provide more fiscal autonomy to states.
At present, states are given 32 per cent of Central taxes, in line with the recommendation of the Thirteenth Finance Commission.
Additionally, the Fourteenth Finance Commission is also expected to have given recommendations on issues including the fiscal deficit of Centre and states, additional resource mobilisation to improve the tax-Gross Domestic Product ratio, spending on subsidies, disinvestment in PSUs as well as the impact of the goods and services tax on the finances of Centre and states.