The government has extended the term of the Fourteenth Finance Commission by two months, giving it time till 31 December 2014 to submit its report.
The union cabinet on Thursday announced its decision to approve the extension of the term of the finance panel and subsequently, the President of India, on 31 October 2014, issued order extending its term till 31 December 2014.
The commission, which was to submit its report by 31 October 2014, had sought an extension of time by two months for submission of its report as it needed more time to examine financial projections, carry out consultations with the government of Andhra Pradesh and Telangana in view of additional term of reference made to the commission on 2 June 2014.
Since Telangana and the remaining state of Andhra Pradesh were new states the finance panel needed to make recommendations in accordance with the Andhra Pradesh Reorganisation Act, 2014.
The commission has also been asked to consider the impact of the proposed Goods and Services Tax (GST) on the finances of the centre and states and the mechanism for compensation in case of any revenue loss. The government plans to introduce GST from 1 April 2016.
The Fourteenth Finance Commission, headed by former RBI governor Y V Reddy has noted economist and former Planning Commission member Abhijit Sen, former finance secretary Sushama Nath, director of National Institute for Public Finance and Policy M Govinda Rao and former acting chairman of the National Statistical Commission Sudipto Mundle as members. Ajay Narayan Jha is the secretary to the commission.
The Fourteenth Finance Commission, constituted on 1 January 2013, was to submit its report on the basis of its terms of reference by 31 October, 2014 covering a period of five years from 1 April 2015 to 31 March 2020.