The government Wednesday extended the 15th Finance Commission's term by a month till November 30, and mandated the panel to suggest ways for allocation of non-lapsable funds for defence and internal security.
The government on November 27, 2017, notified the 15thFinance Commission, headed by N K Singh, to suggest, among other things, theformula for devolution of funds to states by the Centre for five yearscommencing April 1, 2020.
The meeting of the Cabinet, chaired by Prime MinisterNarendraModi, Wednesday approved the changes to the Terms of Reference (ToR) ofthe 15th Finance Commission to address "serious concerns" regardingthe allocation of adequate, secure and non-lapsable funds for defence andinternal security of India.
"Under the ToR of the Commission, it is proposed toensure an assured allocation of resources towards defence and internal securityimperatives.
"The amendment provides that 15th Finance Commissionshall also examine whether a separate mechanism for funding of defence andinternal security ought to be set up and if so how such a mechanism could beoperationalised," an official statement said.
Also the Cabinet approved the extension of the term of theCommission up to November 30, 2019.
"It will enable the Commission to examine variouscomparable estimates for financial projections in view of reforms and the newrealities to finalise its recommendations for the period 2020-2025," thestatement added.
It further said that the ToR of the Commission takes intoaccount the fiscal /budgetary reforms.
The commission was constituted in the backdrop of variousmajor fiscal /budgetary reforms introduced by the government in the past 4years, like closure of the Planning Commission and its replacement byNITlAayog, removal of distinction between Non-Plan and Plan expenditure,advancing the budget calendar by one month and passing of the full budgetbefore commencement of the new financial year, introduction of Goods andServices Tax (GST) from July 2017 and new FRBM architecture with debt andfiscal deficit path, it said.The commission, which has been mandated to use2011 census data, rather than the one of 1971 for resource allocation, was tosubmit its report by October 30, 2019, for 5 years – between 2020-2025.