Fourteenth Finance Commission: Union cabinet may freeze terms of reference

NEW DELHI: The union cabinet is likely to consider on Thursday a proposal for setting up the Fourteenth Finance Commission and also freeze its terms of reference (TOR).

The cabinet may also take up the finance ministry's proposal for setting up the National Investment Board. The primary task of the finance commissions is to give a shape to the fiscal federalism in the country. It decides the formula for sharing of taxes between states and the centre, as provided for in the constitution. The commission is also charged with laying down the principles for giving out grant-in-aid to states.

The thirteenth finance commission, for instance, had been asked to provide a roadmap for fiscal adjustment keeping in mind the liabilities of the Central Government on account of oil, food and fertilizer bonds.

The union cabinet may also consider a proposal to set up the national investment board, a mechanism to speed up project clearance and execution.

The proposal, mooted by the finance ministry, has run into some opposition by the environment ministry but has been endorsed by industry, experts and many ministries.