(1/n) The 15th Finance Commission, chaired by NK Singh submitted its first report consisting of recommendations for the FY 2020-21.
tinyurl.com/15thFCReportSu…
Highlights from our summary: 👇
tinyurl.com/15thFCReportSu…
Highlights from our summary: 👇
(2/n) The share of states in the Centre’s taxes is recommended to be decreased from 42% during the 2015-20 period to 41% for 2020-21. The 1% decrease is to provide for the newly formed union territories of Jammu and Kashmir, and Ladakh from the resources of the Central govt.
(3/n) The table below shows the criteria used for the Centre-State revenue share and the change in weights for each criterion. The 15th FC introduces a new criteria for demographic performance, reintroduces tax effort and replaces forest cover with forest and ecology. 
(4/n) In 2020-21, 14 states are estimated to have an aggregate revenue deficit of Rs.74,340 crore post-devolution. The Commission has recommended revenue deficit grants for these states.
(5/n) The total grants to local bodies for 2020-21 has been fixed at Rs. 90,000 crore, of which Rs. 60,750 crore is recommended for rural local bodies (67.5%) and Rs. 29,250 crore for urban local bodies (32.5%).
(6/n) The FC found the combined tax revenue of Central and State govts to be around 17.5% of the GDP in 2018-19, far below India's estimated tax capacity. It observed that the tax capacity has remained unchanged since the 1990s, while tax rev in other emerging markets have risen.
(7/n) The FC observed the continued dependence of States on compensation from Central Govt. (21 out of 29 states in 2018-19) for making up the shortfall in revenue is a concern. It suggested that structural implications of GST for low consumption states need to be considered.
(9/n) The FC observed that financing capital expenditure through off-budget borrowings detracts from compliance with the FRBM Act. It recommended that both the central and state governments should make full disclosure of extra-budgetary borrowings.
(10/n) The individual shares of states from the divisible pool of Central taxes in accordance with the 15th Finance Commission is tabled 👇
