Risks to fiscal federalism

To minimise risks, the president may consider seeking response from states and the Centre on the 15th Finance Commission's suggestions

The government has proposed to the president to extend the 15th Finance Commission's term by a month, and mandate the panel to suggest ways for allocation of non-lapsable funds for defence and internal security.

Under the terms of reference (ToR) of the Commission, it is proposed to ensure an assured allocation of resources towards defence and internal security imperatives. “The amendment provides that the XV Finance Commission shall also examine whether a separate mechanism for funding of defence and internal security ought to be set up and if so how such a mechanism could be operationalised," an official statement said.

The proposed