Y V Reddy may head 14th Finance Commission

Former governor of the Reserve Bank of India, Y V Reddy, is expected to head the 14th Finance Commission, a constitutional body that is set up every five years.

The union cabinet on Thursday approved the constitution of the 14th Finance Commission, which would suggest formula for sharing of tax proceeds between the central and state governments.

The Commission lays down principles governing the grants-in-aid to states and other local bodies for a five-year period beginning 1 April 2015.

Besides, the commission will consider potential of additional revenue mobilisation, demands on the resources of the centre, and the various requirements of states before finalising its revenue sharing formula

The 13th Finance Commission, headed by former finance secretary Vijay Kelkar, had suggested 32 per cent share for the states in the central revenues.

The cabinet also approved the setting up of a National Automotive Board (NAB), a body to be a facilitator between the government and the automobile industry, and to promote research and development activity.

The body will have members from the department of heavy industry, the Planning Commission and ministries whose ambit would impact the sector, apart from scientists and industry representatives.

The cabinet also approved a proposal of the railway ministry for payment of productivity-linked bonus equivalent to 78 days' wages for the financial year 2011-2012, for non-gazetted employees. The financial outgo on this score would be Rs1,022 crore. About 1.24 million employees would benefit. The pay ceiling for eligibility is Rs3,500 a month. This payment is made each year before the Dussehra/Puja holidays.