Cabinet to take up formation of 14th Finance Commission

Tomorrow, the Cabinet is likely to discuss the constitution of the 14th Finance Commission and the National Automotive Board. The 14th Finance Commission would advise on the devolution of the Centre’s taxes between Centre and states, besides other aspects of the Indian economy, for the 2015-20 period.

Former Reserve Bank of India governor Y V Reddy has emerged as the front runner for the post of the commission’s chairman. Officials said former advisor to the finance minister Parthasarathi Shome and former finance secretary Sushma Nath might also be appointed to the commission. At tomorrow’s meeting, though the Cabinet is expected to clear the terms of reference of the commission, it is unlikely to name the chairman.

 

The 14th Finance Commission might also consider giving a moratorium on the repayment of loans to debt-ridden states. West Bengal has been seeking a three-year moratorium on loans and interest of about Rs 22,000 crore. However, in 2007, the 13th Finance Commission had identified West Bengal, Kerala and Punjab as revenue-deficit states; a moratorium to one state would mean extending the same benefit to the others, too.

The commission might also examine the impact of the proposed Goods & Services Tax (GST). Though the 13th Finance Commission had also considered the issue, the delay in the new indirect tax regime might call for a fresh look, especially considering states’ concern on 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 location for the commission’s secretariat, among other responsibilities.

Tomorrow, the Cabinet is also likely to take up the formation of the National Automotive Board, proposed to promote the sustainable development of the Indian automobile sector. Officials said it would also act as a facilitator between the government and the industry, promote research and development and play a major role in developing skills for the growing automobile sector. Members of the board would include officials from Department of Heavy Industry, the Planning Commission and ministries such as those of road transport and highways, science and technology, environment and forests. Scientists and industry representatives would also be included in the board.