Fourteenth Finance Commision recommendation

Finance Commission is constituted to define financial relations between the center and the states.
Under the provision of Article 280 of the constitution the president appoints a finance Commission for the specific purpose of devolution of non plant revenue resources.
The Finance Commission was established in 1951 by Dr. B. R. Ambedkar
The functions of the Commission are to make recommendations to the president in respect of:
The distribution of net proceeds of taxes to be shared between the union and the states and the allocation of share of such proceeds among the states.
The principles which should govern the payment of grants in aid by the center to the states
Any other matter concerning financial relations between the center and the states.


The Chairman of a finance commission is selected from people with experience of public affairs. The other four members are selected from people who:
Are, or have been, or are qualified, as judges of a High Court,
Have knowledge of government finances or accounts, or
Have had experience in administration and financial expertise; or
Have special knowledge of Economics

Finance Commission
Year of establishment
Chairman
Operational duration
First
1951
K. C. Neogy
1952–57
Second
1956
K. Santhanam
1957–62
Third
1960
A. K. Chanda
1962–66
Fourth
1964
P. V. Rajamannar
1966–69
Fifth
1968
Mahaveer Tyagi
1969–74
Sixth
1972
K. Brahmananda Reddy
1974–79
Seventh
1977
J. M. Shelat
1979–84
Eighth
1983
Y. B. Chavan
1984–89
Ninth
1987
N. K. P. Salve
1989–95
Tenth
1992
K. C. Pant
1995–00
Eleventh
1998
A. M. Khusro
2000–05
Twelfth
2002
C. Rangarajan
2005–10
Thirteenth
2007
Dr. Vijay L. Kelkar
2010–15
Fourteenth
2013
Dr. Y. V Reddy
2015–20
Fifteenth
2017
N. K. Singh
2020–25
The report of the Fourteenth Finance Commission, chaired by Y.V. Reddy, was tabled in Parliament on February 24, 2015.

The Finance Commission is a constitutional body that is formed once in five years, and provides recommendations on centre - state financial relations.

Devolution of taxes to states: T ax devolution should be the primary source of transfer of funds to states. The share of taxes of the centre to states is recommended to be increased from 32% to 42%.

Additional budgetary needs of the states will be filled by grants - in - aid to the states. The total revenue deficit grant to states in the 2015 -20 period is recommended to be Rs 1,94,821 crore.



Recommendations of the 14th Commission include:


Weights of indicators for share in taxes: The weights of various indicators in the calculation of states’ share of taxes have been fixed at the following:

Criteria
Weightage
Population (1971)
17.5%
Demographic Change (2011)
10%
Income Distance (distance of state’s income from the state having the highest income)
50%
Forest Cover
7.5%
Area
15% (2% for smaller states)

Fiscal deficit: Fiscal deficit of states should be aimed at 3% of the Gross State Domestic Product (GSDP) during the period 2015 to 2020.

States will be eligible for a

1. Fourteenth Finance Commission Recommendation Asst. Prof. RanjanI Shukla

2.  Finance Commission  Finance Commission is constituted to define financial relations between the center and the states. Under the provision of Article 280 of the constitution the president appoints a finance Commission for the specific purpose of devolution of non plant revenue resources. The Finance Commission was established in 1951 by Dr. B. R. Ambedkar

3.  Finance Commission  The functions of the Commission are to make recommendations to the president in respect of: The distribution of net proceeds of taxes to be shared between the union and the states and the allocation of share of such proceeds among the states. The principles which should govern the payment of grants in aid by the center to the states Any other matter concerning financial relations between the center and the states.

4. Qualifications of the members The Chairman of a finance commission is selected from people with experience of public affairs. The other four members are selected from people who: Are, or have been, or are qualified, as judges of a High Court, Have knowledge of government finances or accounts, or Have had experience in administration and financial expertise; or Have special knowledge of Economics

5. List of Finance Commissions Finance Commission Year of establishment Chairman Operational duration First 1951 K. C. Neogy 1952–57 Second 1956 K. Santhanam 1957–62 Third 1960 A. K. Chanda 1962–66 Fourth 1964 P. V. Rajamannar 1966–69 Fifth 1968 Mahaveer Tyagi 1969–74 Sixth 1972 K. Brahmananda Reddy 1974–79 Seventh 1977 J. M. Shelat 1979–84 Eighth 1983 Y. B. Chavan 1984–89 Ninth 1987 N. K. P. Salve 1989–95 Tenth 1992 K. C. Pant 1995–00 Eleventh 1998 A. M. Khusro 2000–05 Twelfth 2002 C. Rangarajan 2005–10 Thirteenth 2007 Dr. Vijay L. Kelkar 2010–15 Fourteenth 2013 Dr. Y. V Reddy 2015–20 Fifteenth 2017 N. K. Singh 2020–25

6. Fourteenth Finance Commission  The report of the Fourteenth Finance Commission, chaired by Y.V. Reddy, was tabled in Parliament on February 24, 2015. The Finance Commission is a constitutional body that is formed once in five years, and provides recommendations on centre - state financial relations.

7. Recommendations of the 14th Commission include: Devolution of taxes to states:  T ax  devolution should be the primary  source of  transfer of funds to states. The share of  taxes of the centre to states is  recommended to be  increased from 32% to 42%.  Additional budgetary needs of the states will be filled by grants - in - aid to the states. The total revenue deficit grant to states in the 2015 -20 period is recommended to be Rs 1,94,821 crore. 

8. Recommendations of the 14th Commission include: Weights of indicators for share in taxes: The weights of various indicators in the calculation of states’ share of taxes have been fixed at the following:  Criteria Weightage Population (1971)  17.5% Demographic Change (2011) 10% Income Distance   (distance of state’s income from the state having the highest income) 50% Forest Cover 7.5% Area  15% (2% for smaller states)

9. States Share(%) Andhra Pradesh 4.305 Arunachal Pradesh 1.370 Assam 3.311 Bihar 9.665 Chhattisgarh 3.080 Goa 0.378 Gujarat 3.084 Haryana 1.084 Himachal Pradesh 0.713 Jammu & Kashmir 1.854 Jharkhand 3.139 Karnataka 4.713 Kerala 2.500 Madhya Pradesh 7.548 Maharashtra 5.521

10. States Share (%) Manipur 0.617 Meghalaya 0.642 Mizoram 0.460 Nagaland 0.498 Odisha 4.642 Punjab 1.577 Rajasthan 5.495 Sikkim 0.367 Tamil Nadu 4.023 Telangana 2.437 Tripura 0.642 Uttar Pradesh 17.959 Uttarakhand 1.052 West Bengal 7.324 Sum 100.000

11. Recommendations of the 14th  Commission  include:

12. Recommendations of the 14th Commission include:

13. ANY QUESTIONS?