Home >News >India >Centre likely to extend tenure of 15th Finance Commission

The Centre may extend the tenure of the 15th Finance Commission (FFC) by an year, in view of the uncertainty surrounding the impact of covid-19 on the Indian economy, and the difficulty in calculating growth and revenue forecasts for states. If granted, this will be the second extension to the FFC, since the cabinet, last November, extended the tenure of the commission till October 2020.

“We are considering asking the Finance Commission to present an interim report for FY22 by October, while giving it more time to submit its final report for the remaining four years," a finance ministry official said, requesting anonymity.

The countrywide lockdown has stalled economic activity with massive job losses across sectors. It has also squeezed revenue streams for both the Centre and states. Most economic forecasters have slashed their growth projections for India to 0-2% for FY21.

The first report of the FFC was made public on 1 February, wherein it pared down the share of states in the divisible pool of central taxes by one percentage point to 41%, factoring in the conversion of Jammu and Kashmir into two UTs.

The Economic Advisory Council of the FFC, headed by N.K. Singh, will hold a two-day virtual meeting, starting Thursday, to discuss the implications of the pandemic on economic growth for FY21 and FY22, and the stimulus required.

Pronab Sen, former chief statistician of India, said it would be better to extend the term of the FFC with an interim report for FY22. “What will remain completely unknown till much later is the growth prospect of different states, which is a critical element in deciding the devolution formula," he added.

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