Union cabinet to consider constitution of Fourteenth Finance Commission on Thursday

NEW DELHI: The union cabinet will on Thursday consider the proposal of setting up the Fourteenth Finance Commission and also freeze its terms of reference (TOR). The cabinet may also take up a 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 central government may at times also give the finance commission specific reference on a particular issue that it may be trying to address. 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.