The Union Cabinet has extended the term of the 15th Finance Commission by a year to October 30, 2020. A cabinet press release says the commission, on account of the restrictions imposed by the model code of conduct in Maharashtra, completed its visit to states only recently. This has had a bearing on the detailed assessments of states' requirements.
The Finance Commission is responsible for making recommendations to the Centre on tax devolution to states and union territories.
Talking to CNBC-TV18, Govinda Rao, a former member of the PM's Economic Advisory Council (PMEAC), justified the extension. “I wrote an article about 15 days ago saying that they should at least extend it by 6 months. There were reports that the term of the commission will be extended and I had written the article in response to that,” he said.
“There is nothing wrong in it. Even in the past, we had this situation – the 8th Finance Commission was asked to give an interim report for one year and then a 4-year report later. The 9th Finance Commission was asked to give two reports, one for 1999-2000 and another for 5 years. The 11th Finance Commission, even after submitting their report, was asked to relook at the issues and was asked to monitor fiscal reforms programme linked to the grants, so an additional term was given. So, there are precedents,” he added.