Setting up of the 15th Finance Commission has been approved by the union Cabinet to decide on the new formula to share resources between the Centre and the states. The new commission will have a heavier agenda, given major changes following introduction of GST. The committee on amendments to the fiscal responsibility law headed by former Planning Commission member NK Singh had also sought a detailed examination of its proposal by the new finance commission to cap state debt at 20 per cent of GDP, while capping overall government debt at 60 per cent of GDP.
Finance Minister Arun Jaitley said members of the finance commission and its terms of reference will be notified in due course of time. The recommendations will have to be in place before April 1, 2020. “Normally, it takes two years for finance commission to give its recommendations.” The 14th Finance Commission headed by former RBI governor YV Reddy had prompted the government to introduce major changes in the way spending took place.
