The term of the Fourteenth Finance Commission has been extended by a period of two months to give it more time to carry out financial projections and consultations for the new states of Telangana and Andhra Pradesh.
“The President of India, on 31st October, 2014 has issued order for extension of time for the Fourteenth Finance Commission by two months up to 31st December, 2014,” said a finance ministry statement on Saturday, adding that the proposal has been approved by the Union Cabinet in its meeting last week.
The Finance Commission, which is a Constitutional body, is set up every five years to recommend sharing of tax proceeds between the Centre and the state. The Fourteenth Finance Commission, which is chaired by former RBI Governor YV Reddy, was set up in January 2013. Its recommendations would be applicable for the five-year period commencing from April 1, 2015.
However, following the bifurcation of Andhra Pradesh, the terms of reference of the Commission was expanded in June this year so that it could also make recommendations for the successor States on reorganisation of the State of Andhra Pradesh in accordance with the Andhra Pradesh Reorganisation Act, 2014.
The Indian Express had in January this year reported that the term of the finance commission would be extended. However, despite the extension, the finance ministry would have enough time to review the report and reflect its recommendations in the Union 2015-16 that is expected to be presented in February next year.