TWELFTH FINANCE COMMISSION
CONSTITUTED
The President has constituted the Twelfth Finance
Commission with Dr. C. Rangarajan, Governor of Andhra Pradesh
as the Chairman, Shri Som Pal, Member, Planning Commission as
a part-time Member and Shri T.R. Prasad, IAS, former Cabinet Secretary
and Professsor D.K. Srivastava of the National Institute of Public
Finance and Policy as full-time Members. Shri G.C. Srivastava,
IAS, will be the Secretary of the Commission. The notification
of the fourth Member of the Commission will be issued separately.
The recommendations of the Twelfth Finance Commission
will be valid for the period 2005-10. The Finance Commission is
a Constitutional body set up after about every five years to make
recommendations relating to distribution between the Union and
the States of the net proceeds of taxes, principles which should
govern the grants-in-aid of revenues and measures needed to augment
the Consolidated Fund of the States to supplement the resources
of the Panchayats and Municipalities. The President is also empowered
to refer any other matter to the Commission in the interest of
sound finance.
The Twelfth Finance Commission, apart from the
terms of reference specifically laid down in the Constitution,
will review the state of the finances of the Union and the States
and suggest ways and means by which the Governments, may bring
about a restructuring of public finances, restoring budgetary
balance, reducing fiscal deficit, generating surplus for capital
investment, achieving macro-economic stability and achieving debt
reduction along with equitable growth.
The considerations to be taken into account by
the Commission while making its recommendations include, as in
the 11th Finance Commission, assessment of the resources
of the Centre and the States for the 5 years commencing 1 April,
2005 on the basis of level of taxation and non-tax revenues possible
to be reached in 2003-04; taxation efforts against targets, etc.
The other issues proposed for study by the Twelfth
Finance Commission include the Fiscal Reforms Facility, the debt
position of States, the Calamity Relief Fund and the National
Calamity Contingency Fund.
The Twelfth Finance Commission is required to
furnish its report by 31 July, 2004 so that Government’s decision
on its recommendations are given effect to in the Budget for the
year 2005-06.
As compared to the Terms of Reference of the
Eleventh Finance Commission, the Terms of Reference of the Twelfth
Finance Commission lay emphasis on certain efficiency factors
such as adjustment of user charges, relinquishing non-priority
enterprises through privatization or disinvestment and resource
mobilisation in order to improve tax-GDP/GSDP ratio. It also emphasizes
achievement of macro-economic stability and debt reduction along
with equitable growth.
