The Union Cabinet chaired by Prime Minister Narendra Modi has approved the extension of the term of Fifteenth Finance Commission up to 30th November, 2019. It will enable the Commission to examine various comparable estimates for financial projections in view of reforms and the new realities to finalise its recommendations for the period 2020-2025.

Background:

The Fifteenth Finance Commission has been constituted by the President on 27tn November, 2017 in ' pursuance of clause (1) of article 280 of the Constitution and Finance Commission (Miscellaneous Provisions) Act, 1951. The Commission was to submit its Report on the basis of its Terms of Reference (ToR) by 30th October, 2019 covering a period of five years commencing from 1st April, 2020.

The constitution of the Commission has been in the backdrop of various major fiscal/budgetary reforms introduced by the Union Government in the past four years like closure of the Planning Commission and its replacement by NITl Aayog, removal of distinction between Non-Plan and Plan expenditure, advancing the budget calendar by one month and passing of the full budget before commencement of the new financial year i.e. on 1st February, introduction of Goods and Services Tax (GST) from July 2017 and New FRBM architecture with debt and fiscal deficit path.

The ToR of the Commission takes into account the above fiscal/budgetary reforms. The task of determining the expenditure and receipts of the Union and State governments based on which the Commission shall make its recommendations is time consuming, as checks for data consistency across time and data sets become challenging.

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AKT/PK/SH

Extension of Finance Commission term to complete financial projections and finalise intergovernmental fiscal recommendations. Extension of the Fifteenth Finance Commission's term authorises additional time to finalise its recommendations for the five-year period commencing April 2020 by permitting further examination of comparable financial projections in light of recent fiscal reforms. The measure responds to the time-consuming task of determining Union and State expenditures and receipts, requiring data consistency checks across evolving datasets to support credible intergovernmental fiscal recommendations.