The 2nd meeting of the 15th Finance Commission with the NITI Aayog was held here today.  The Aayog including  its Vice Chairman Dr. Rajeev Kumar,  Members, CEO and other Senior Officials,  interacted with the Finance Commission  including Chairman Shri N.K. Singh, Members and Senior Officials.

The NITI Aayog put forth suggestions for the 15th Finance Commission and made a case for award of  Performance Based Grants   for States /Sectors.  While observing that richer states grew faster than poorer states, the NITI Aayog made suggestions to the Commission on transfer of resources to States by the Centre.  The Aayog also listed out certain possible indicators for the consideration of the Commission, its  made recommendations on Innovation and Transformation funds as  well as on Medium Term Expenditure Framework. 

Appreciating the suggestions of the Aayog, Chairman, Shri N.K. Singh said there were concrete new thoughts and Commission would certainly examine the recommendations thoroughly.  The Chairman added that since NITI Aayog was an important and integral part of the Central Government, its recommendations must be part of the Central Government Memorandum to the Finance Commission.  

The Members also exchanged views on the issues raised by the Aayog and discussed relevant issues like the Centrally Sponsored Schemes – which have now been made Co-terminus with the award  period of the respective Finance Commission, conditionality/lack-of-conditionality of the horizontal, vertically and sector specific, and striking balance between performance grants and basic grants.

Performance based grants to states proposed, urging indicator-driven transfers and balance with basic grant regimes. Proposal for Performance Based Grants to states framing resource transfers on measurable indicators and sectoral outcomes, with suggested candidate indicators; recommendations to establish Innovation and Transformation Funds and adopt a Medium Term Expenditure Framework to align incentives and expenditure planning. The submission also urged inclusion of these recommendations in the Central Government memorandum to the Finance Commission and highlighted design issues including alignment of Centrally Sponsored Schemes with award periods and the balance between performance-linked and basic grants.