ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Challenges before the Fifteenth Finance Commission

The terms of reference of the Fifteenth Finance Commission are significantly different from those of earlier finance commissions. Some of these changes are within the mandate of the Constitution. Some do not appear to be so. Others appear extraneous. Some appear to urge the commission to asymmetrically treat a group of states. This article examines the challenges the XV-FC will face while addressing these changes.

Black Money in Politics

This article argues that the Election Commission of India should proactively implement electoral reforms aimed at improving transparency in electoral funding and ensuring that political parties do not misuse the tax benefits provided to them. It is adequately empowered to bring political parties under the ambit of the Right to Information Act and order full disclosure of all donations received by them. No additional legislation is required.

What Ails the Implementation of the Goods and Services Tax?

Since the Goods and Services Tax cannot be implemented by 1 April 2016, there is a strong case to implement a central GST from that date by merging the excise and service tax regimes. Such an integrated framework will not require any major legislative change; it will demonstrate the central government's commitment to the GST, and give confidence to trade and industry.

Stance on Devolution and Grants

The Fourteenth Finance Commission is to be commended for bringing states to the forefront of the development paradigm. The award is transformational but the fall in progressivity is of concern. There is a divergence in the growth projections between the FFC and the central and state governments. This underlines the need to implement quickly the recommendations to put in place an institutional framework for ex ante and ex post validation of both central and state budgets.

Do Not Dilute NREGA

[An Open Letter to the Prime Minister on NREGA by economists based in India and elsewhere in the world.] We are writing to express our deep concern about the future of India’s National Rural Employment Guarantee Act (NREGA). The NREGA was enacted in 2005 with unanimous support from all political...

Case for Including Immovable Property in the GST

Including immovable property transactions in the tax base of the proposed Goods and Services Tax will curb the generation of black money while improving tax buoyancy. A model for such inclusion is proposed here. GST could be applied at a concessional rate after providing for suitable exemptions for sale and lease of domestic housing units.

Population as a Criterion for Horizontal Devolution by the 14th Finance Commission

Complying with their terms of reference, the last seven finance commissions have used the 1971 population as a parameter for determining the shares of states. However, the ToR of the 14th FC permits it to additionally consider demographic changes since 1971. This article argues that this incremental change does not provide adequate cause for the 14th FC to depart from the path of its predecessors.

Issues before the Fourteenth Finance Commission

This article poses four questions which will need to be addressed by the recently-constituted Fourteenth Finance Commission. Given an expansive terms of reference, should the commission confi ne itself to its constitutional mandate? Second, should the commission seek to develop incentive frameworks which will carry credibility with future commissions? Third, should the commission encourage better fiscal performance in the states more explicitly? Fourth, should the commission provide fiscal headroom in its projections for accommodating unanticipated developments?

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