Cabinet clears setting up of 14th Finance Commission

The Cabinet today cleared constitution of the 14th Finance Commission which will give recommendations on devolution of Central taxes between the Union government and states.

According to news agency Press Trust of India, a minister said after the Cabinet meeting that it has approved setting up of the commission.
Besides tax devolution, the 14th Finance Commission will advise on other components of the federal structure of the Indian economy for the 2015-20 period.

Former Reserve Bank governor Y V Reddy has emerged as a front-runner for the post of chairman of the Commission. Officials said finance minister’s former advisor, Parthasarthi Shome, and former finance secretary Sushma Nath could be appointed as the other members of the Commission.

 

The Commission might also look at the issue of giving a moratorium on repayment of loans of debt-ridden states. West Bengal has been asking for a moratorium on its interest and repayments of about Rs 22,000 crore for the next three years. The Centre’s dilemma is that the 13th Finance Commission had identified West Bengal, Kerala and Punjab as revenue-deficit states in 2007 and a moratorium to one state would mean extending the same benefit to the others, too.

The Commission might also look at the impact of the proposed Goods & Services Tax (GST). Though the 13th Finance Commission had also looked at the issue, the delay in the new indirect tax regime might call for a fresh look, especially in the light of issues raised by the states with regard to Central Sales Tax compensation and loss of autonomy in the GST regime.

An Officer on Special Duty has been appointed to help finalise the terms of reference and decide on a place for the Commission’s secretariat, along with other administrative issues.

The 13th Finance Commission was headed by former finance secretary Vijay Kelkar.
                    
The Cabinet also approved setting up of a National Automotive Board (NAB), a body which would act as a facilitator between the government and the industry and promote R&D activities in the sector.    

"The Union Cabinet has approved the NAB proposal," PTI quoted a senior minister as saying.

NAB will be a specialised body for promoting sustainable development of the Indian auto sector. Besides, it would also have a larger role in developing skills for the growing automobile sector.

The board would also act as a think tank for the government, especially for the growth of hybrid and electric vehicles in the country.    

It would have members from the Department of Heavy Industry, Planning Commission and from various ministries, including Road Transport and Highways, Science and Technology, Environment and Forests. Besides, there would be scientists and industry representatives on the board.

Other decisions cleared by the Cabinet:

i) Increase in pension from Rs 200 a month to Rs 300 under the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme.

ii) A comprehensive multi pronged strategy for the prevention and control of Japanese Encephalitis (JE) and Acute Encephalitis Syndrome (AES). Cost in this regard is estimated at around Rs 4,308 crore and the funds will be spent on various programmes on 60 districts in Uttar Pradesh, West Bengal, Bihar, Assam and Tamil Nadu  to control the diseases for five years starting this fiscal.

iii) Waiver of loans and interest to the tune of Rs 2.10 crore for the 370 tsunami affected fishermen.