16th commission being set up with 'generic' terms of reference

Climate, sustainable development goals likely to be in focus

- PRASANTA SAHU

• 15TH FC TARGETS MET AHEAD OF SCHEDULE, BUT DEBT CONCERNS LINGER

THE 16TH FINANCE Commission (FC) may be urged to consider incentives for improvement in debt consolidation and quality of expenditure, issues which were considered by the 15th FC too, though it did not assign any specific weights to them in the criteria for tax devolution or disbursal of grants-in-aid.

The setting up of the new FC, whose five-year award period starts from FY27, is learnt to have been on the agenda of the Union Cabinet meeting on Tuesday. However, till the time of going to press, there was no official word on whether the Cabinet approved the formation of the commission or its terms of reference (TOR).

Official sources said the TOR would likely stick to the mandate under Article 280 of the Constitution and would be "generic" in nature. The government would seek to avoid a controversy or rift with states ahead of the general elections, they added.

This contrasts with the TOR given to 15th FC, which was controversial for an implicit directive to dispense with the revenue deficit grants to state governments and the suggestion that the population data of 2011 census be relied upon, instead of the conventional practice of 1971 census data.

Of course, the commission performed a balancing act, by prescribing a tapering of revenue deficit grants instead of their sudden withdrawal, and giving a certain weight to population control performance in tax devolution criteria.

The formation of the 16th FC comes amid continued concerns over high public debt and the pressure on sovereign funds to meet sustainable development goals (SDGs), and critical infrastructure creation.