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15th FC Submitted its Report for 2021-26 to President; Centre released Rs 2,200 cr to improve air quality

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15th Finance Commission submits its Report for 2021-22 to 2025-26 to the President of IndiaOn November 9, 2020, the Fifteenth Finance Commission (XVFC) led by Chairman Nand Kishore (NK) Singh submitted its Report titled “Finance Commission in Covid Time” for the period of five years from 2021-22 to 2025-26 to the President of India  Ram Nath Kovind. The cover of the report has a figure of scales indicating the balance between the States and the Union.

  • Members of the Commission: Ajay Narayan Jha, Prof. Anoop Singh, Dr. Ashok Lahiri and Dr. Ramesh Chand
  • According to the XVFC’s terms of reference (ToR) set by the President, the commission has examined and recommended the devolution of funds between the Centre and the States for a five years period along with wide-ranging recommendations in different sectors.
  • It also addressed the unique ToR of considering a new non-lapsable fund for financing national security and defence spending, and offering performance incentives for States.
  • The Commission was also asked to examine and recommend performance incentives for States in many areas like power sector, adoption of DBT, solid waste management etc. The Commission was also asked to examine whether a separate mechanism for funding of Internal Security ought to be set up and if so how such a mechanism could be operationalised.

–Health Care Scenario Added for 1st Time

It should be noted that this is the first time that a chapter on the health care scenario of the country is introduced along with recommendations in order to boost public-health spending in a post-pandemic era.

  • The target is that the Centre alone should be able to spend at least 2.1% of GDP (Gross Domestic Product) on health in the next five years.

–Volumes of Report:

This Report has been organised in four volumes.

  • Volume I and II contains the main report and the accompanying annexes.
  • Volume III is devoted to the Union Government and examines key departments in greater depth, with the medium-term challenges and the roadmap ahead.
  • Volume IV is entirely devoted to the States i.e. State-specific considerations are taken to address the key challenges that individual States face.

Point to be noted:

i.Originally the recommendations are to be made for the period 2020-21 to 2024-2025, but the Commission had submitted an interim report for 2020-21 in 2019, stressing due to unclear projections for five years due to economic slowdown due to GST (Goods and Service Tax) and the insolvency code.

  • The interim report had reduced States’ share in the divisible pool of taxes from 42% to 41% for the current year, after the dissolution of Jammu and Kashmir as a State.

The Report will be available in the public domain once it is tabled in the Parliament by the Union Government.

Centre releases Rs 2,200 cr for 42 cities for improving air quality; Greater Mumbai received highest

Based on the recommendations of XVFC, the central government on November 9, 2020 released Rs 2,200 crore as the first installment to 15 states for the improvement of air quality measures in their cities.  Under this, 42 cities will be covered with a population in excess of a million.

This grant will be used under the National Clean Air Programme (NCAP) to improve air quality in these cities.

  • The states (State Finance Department) shall transfer grants-in-aid directly to all local bodies
  • The local bodies in the list shall entrust one urban local body as a nodal entity to receive the grants.
  • Greater Mumbai (Maharashtra) has received the highest share of funds, Rs 244 crore followed by Kolkata, West Bengal (Rs 192 crores), Bengaluru, Karnataka (Rs 139.5 crore) and Chennai, Tamil Nadu (Rs 90 crore).

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Recent Related News:

  • In a meeting with the 15th Finance Commission the Union Health Minister Harsh Vardhan highlighted that the government aims to gradually increase the public health expenditure to 2.5% of GDP by 2025.
  • On 19th October 2020, Nand Kishore Singh released his autobiography titled “Portraits of Power: Half a Century of Being at Ringside”. The book is published by Rupa Publications India.

About Fifteenth Finance Commission (XVFC):

The Fifteenth Finance Commission was constituted by the President of India on November 27, 2017 in pursuance of clause (1) of Article 280 of the Constitution and Finance Commission (Miscellaneous Provisions) Act, 1951.

  • The Constitution, through Articles 280 to 281, provides for finance commissions, set up every five years, as a mechanism to divide taxes and revenues vertically i.e. between the Centre and states, and horizontally, i.e. among all states, based on their levels of development, prosperity and regional needs.