2. Notification for the fourth member will be issued
separately. *
3. The Chairman and the other members of the
Commission shall hold office from the date on which they respectively assume office upto
the 31st day of July,
2004. #
4. The Commission shall make recommendations 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 the consolidated Fund of India and the
sums to be paid to the States which are in need of assistance by way of grants-in-aid of
their revenues under article 275 of the Constitution for purposes other than those
specified in the provisions to clause (1) of the article; and
(iii) the measures needed to augment the Consolidated
Fund of a 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.
5. The Commission shall review the state of the
finances of the Union and the States and suggest a plan by which the governments,
collectively and severally, may bring about a restructuring of the public finances
restoring budgetary balance, achieving macro-economic stability and debt reduction along
with equitable growth.
6. 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 levels 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 of 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 amounts 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 privatisation or disinvestment.
7. 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.
8. 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.
9. The Commission may, after making an assessment of
the debt position of the States as on the 31st march 2004, suggest such corrective
measures, as are deemed necessary, consistent with macro-economic stability and debt
sustainability. Such measures recommended will give weightage to the performance of the
States in the fields of human development and investment climate.
10. 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 make appropriate recommendations
thereon.
10 A.** (i) Whether non-tax income of profit
petroleum to the Union, arising out of contractual provisions, should be shared with the
States from where the mineral oils are produced; and,
(ii) If so, to what extent.
11. The Commission shall indicate the basis on which
it has arrived at its findings and make available the State-wise estimates of receipts and
expenditure.
12. The Commission shall make its report available by
the 31st July, 2004, covering a period of five
years commencing on the 1st April, 2005. @
Sd/-
(Dr. A.P.J. ABDUL KALAM)
President of India
[NO. 10(13)-B(S)/2002]
D. SWARUP, Addl. Secy. (Budget)
* Dr. G. C. Srivastava has been appointed as
Member Secretary against the
vacancy of the fourth Member with effect from July 1, 2003 vide notification
No. S. O. 749(E) dated June 30, 2003.
** Inserted by the President's Order S. O.
1263(E) dated October 31, 2003
$ Dr. Shankar N. Acharya has been appointed as
Member (Part-Time)of the Finance Commission vide notification No. S.O.771(E)
dated July 2, 2004, in place of Shri Som Pal,who has resigned with effect from the 14th
day of May,2004.
# The 31st day of December, 2004" has
been substituted in place of "The 31st day of July 2004" vide notification
No. 770(E) dated July 2,2004.
@ The 30th day of November,2004" has
been substituted in place of "the 31st July,2004" vide notification No.
770(E) dated July 2,2004.