Excelsior Correspondent
JAMMU, Nov 27: The Union Cabinet today extended the term of 15th Finance Commission by 11 months as it needed more time in the wake of change of status of Jammu and Kashmir, an erstwhile State which was divided into two Union Territories of J&K and Ladakh in August.
Term of the Finance Commission which was scheduled to end on November 30 has now been extended till October 30, 2020, official sources told the Excelsior.
However, they said, the Commission will submit an interim report on November 30 suggesting formulae for tax devolution for the year 2020-21 fiscal year as validity of previous formulae ends on March 31,2020.
“The Finance Commission required more time in the wake of conversion of J&K into two Union Territories,” sources said.
Though the Finance Commission jurisdiction is confined to the States and not the Union Territories, Excelsior had exclusively reported that the Centre has decided to relax conditions through a Presidential order to facilitate the Finance Commission award to the Union Territory of J&K to boost its development.
An official statement issued after the Cabinet meeting didn’t mention additions to the terms of reference, but they are believed to have been approved.
Changes in terms of reference were required because of the Kashmir development. Since the Finance Commission’s recommendation on devolution is meant only for States and as Jammu & Kashmir had been bifurcated into two Union Territories, there was a need to change the terms of reference, which was approved by the Cabinet today.
Section 83 of the Jammu and Kashmir Reorganization Act, 2019 reads: “On the appointed day, the President will make a reference to the 15th Finance Commission to include Union Territory of Jammu and Kashmir in its Terms of Reference and make award for the successor Union Territory of Jammu and Kashmir.”
Normally, grants for a Union Territory are provided by the Home Ministry and the Finance Commission Award is confined to the States.
According to an official statement issued after the Cabinet meeting, the Cabinet approved the 15th Finance Commission plan to submit the report for the fiscal year 2020-21 immediately and decided to extend the tenure of the panel for the presentation of the final report covering Financial Years 2021-22 to 2025-26 by October 30, 2020.
“The extension of the term will enable the Commission to examine various comparable estimates for financial projections in view of reforms and the new realities to finalize its recommendations for the period 2020-2026,” the statement said.
The statement also mentioned that the Terms of Reference for the Commission are wide-ranging in nature. Comprehensively examining their implications and aligning them to the requirements of the States and the Central Government will require additional time. The proposed increase in coverage of the period for which the Commission’s recommendations are applicable, will help medium-term resource planning for the Centre and the State Governments.
Making a five-year coverage available for the Commission beyond April 1, 2021, will help the Centre and the State Governments design schemes with medium to long-term financial perspective and provide adequate time for mid-course evaluation and correction.
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