1. The Twelfth Finance Commission invites suggestions on issues related to its terms of reference from the members of the general public, Institutions and Organizations.

2. The Twelfth Finance Commission has been constituted under Article 280 of the Constitution of India by the President under the Chairmanship of Dr. C. Rangaranjan vide a Notification dated 1st November, 2002. The Commission shall make recommendations covering a period of five years commencing on the 1st April 2005 as to the following matters :-

(i) The distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under Chapter I Part XII of the Constitution and the allocation between the States of the respective shares of such proceeds;

(ii) The principles which should govern the grants-in-aid of the revenues of the States out of Consolidated Fund of India and the sums to be paid to the State which are in need of assistance by way of grants-in-aids of their revenues under articles 275 of the Constitution for purposes other than those specified in the provisions of clause (i) of that article and

(iii) The measures needed to augment the Consolidated Fund of State to supplement the resources of the Panchayats and Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State.

3. The Commission shall review the state of the finances of the Union and the States and suggest the plan by which the Governments, collectively and severally, may bring about a restructuring of the public finance restoring budgetary balance, achieving macro-economic stability and debt reduction along with equitable growth.

4. In making its recommendations, the Commission shall have regard, among other considerations, to :-

(i) The resources, of the Central Government for five years commencing on 1st April, 2005, on the basis of levels of taxation and non-tax revenues likely to be reached at the end of 2003-04.

(ii) The demands on the resources of the Central Government, in particular, on account of expenditure on civil administration, defence, internal and border security, debt-servicing and other committed expenditure and liabilities;

(iii) The resources of the State Governments, for the five years commencing on 1st April 2005, on the basis of level of taxation and non-tax revenues likely to be reached at the end of 2003-04;

(iv) The objective of not only balancing the receipts and expenditure on revenue account of all the States and the Centre, but also generating surpluses for capital investment and reducing fiscal deficit;

(v) Taxation efforts of the Central Government and each State Government as against targets, if any, and the potential for additional resources mobilization in order to improve the tax-Gross Domestic Product (GDP) and tax Gross State Domestic Product (GSDP) ratio, as the case may be;

(vi) The expenditure on the non-salary component of maintenance and upkeep capital assets and the non-wage related maintenance expenditure on plan schemes to be completed by the 31st March 2005 and the norms on the basis of which specific amount are recommended for the maintenance of the capital assets and the manner of monitoring such expenditure;

(vii) The need for ensuring the commercial viability of irrigation projects, power projects, departmental undertakings, public sector enterprises etc. in the States through various means including adjustment of user charges and relinquishing of non-priority enterprises through privatization or disinvestment

5. In making its recommendations on various matters, the Commission will take the base of population figures as of 1971, in all such cases where population is a factor for determination of devolution of taxes and duties and grants-in-aid.

6. The Commission shall review the Fiscal Reform Facility introduced by the Central Government on the basis of the recommendations of the Eleventh Finance Commission, and suggest measures for effective achievement of its objectives.

7. The Commission may, after making an assessment of the debt position of the State as on the 31st March 2004, suggest such corrective measures, as are deemed necessary, consistant with macro-economic stability and debt sustainability. Such measures recommended will give weightage to the performance of the State in the fields of human development and investment climate.

8. The Commission may review the present arrangements as regards financing of Disaster Management with reference to the National Calamity Contingency Fund and the Calamity Relief Fund and made appropriate recommendations thereon.

9. Suggestions may be addressed to the Secretary of Twelfth Finance Commission, 3rd Floor, Lok Nayak Bhawan, Khan Market, New Delhi-110003 so as to reach his office preferably by 31st December 2002.