|
 TERMS OF REFERENCE
OF THE ELEVENTH FINANCE COMMISSION
Paras 3-12 of the Presidential Order dated 3RD July,
1998 containing the terms of reference of the Eleventh Finance
Commission are reproduced below:-
3. The Commission shall make recommendations as to
the following matters:-
(a) 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 of Part XII of the Constitution
and the allocation between the States of the respective
shares of such proceeds;
(b) 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 provisos to clause (1) of that
article;
(c) the measures needed to augment the Consolidated Fund
of a State to supplement the resources of the Panchayats
in the State on the basis of the recommendations made by
the Finance Commission of the State;
(d) the measure needed to augment the Consolidated Fund
of a State to supplement the resources of the Municipalities
in the State on the basis of the recommendations made by
the Finance Commission of the State;
4. The Commission shall review the state of the finances
of the Union and the States and suggest ways and means by
which the governments, collectively and severally, may bring
about a restructuring of the public finances so as to restore
budgetary balance and maintain macro-economic stability.
5. In making its recommendations, the Commission shall
have regard, among other considerations, to:-
(i) the resources of the Central Government and the demands
thereon, in particular, on account of expenditure on civil
administration, defence and border security, debt servicing
and other committed expenditure or liability;
(ii) revenue resources of the States for the five years
commencing on 1st April, 2000, on the basis of levels of
taxation possible to be reached in 1998-99, targets set
for additional resources mobilisation for the Plan and the
potential for raising additional taxes;
(iii) the requirement of the States for meeting the Plan
and non-Plan revenue expenditure, keeping in view the need
for generating surplus for capital investment and reducing
fiscal deficit;
(iv) the maintenance and upkeep of capital assets and maintenance
expenditure of plan schemes to be completed by 31st March,
2000 and the norms on the basis of which specified amounts
are recommended for the maintenance of the capital assets
and the manner of monitoring such expenditure;
(v) the requirements of States for upgradation of standards
in non-developmental and social sectors and services particularly
of States which are backward in general administration with
a view to modernise and rationalise the administrative set
up in the interest of speed, efficiency and sound fiscal
management.
(vi) the need for ensuring reasonable returns on investment
by the States in irrigation projects, power projects, State
Transport Undertaking, departmental commercial undertakings,
public sector enterprises, etc;
(vii) such provisions for emoluments and terminal benefits
of Government employees including teachers and other employees
of aided institutions as obtaining on a specified date as
the Commission deems it proper and with reference to appropriate
objective criteria rather than in terms of actual increases
that may have been given effect to;
(viii) the scope for better fiscal management consistent
with efficiency and economy in expenditure including the
incentives that need to be provided for better realisations
of tax and non tax revenue.
6. In the case of local bodies:-
(a) the Commission shall take into account the recommendations
of the State Finance Commissions; and
(b) where the State Finance Commissions have not been constituted
as yet, or have not submitted their report giving recommendations,
the Commission will make its own assessment about the manner
and extent of augmentation of Consolidated Fund of the State
to supplement the resources of the Panchayats and Municipalities
in the State. While making such assessment, the Commission:-
(i) shall take into account the provisions required to
be made for the emoluments and terminal benefits of the
employees of local bodies including those of teachers;
(ii) shall take into account the existing powers of the
Panchayats and Municipalities to raise financial resources
including those by way of raising additional taxes by
the Panchayats and Municipalities; and
(iii) the powers, authority and responsibility transferred
to Panchayats and Municipalities under Article 243 G and
243 W of the Constitution read with Schedules Eleven and
Twelve.
7. The Commission may suggest changes, if any, to
be made in the principles governing the distribution amongst
the States of:-
(a) the net proceeds in any financial year of the additional
duties of the excise leviable under the Additional Duties
of Excise (Goods of Special Importance) Act, 1957 (58 of
1957) in lieu of the sales tax levied formerly by the State
Governments, and
(b) the grants to be made available to the States in lieu
of the tax under the repealed Railway Passenger Fares Tax
Act, 1957 (25 of 1957).
8. In making its recommendations on the various matters
aforesaid, the Commission shall adopt the population figures
of 1971 in all cases where population is regarded as a factor
for determination of devolution of taxes and duties and grants-in-aid.
9. The Commission may make an assessment of the debt
position of the States as on 31st day of March, 1999 and suggest
such corrective measures as are deemed necessary, keeping
in view the long term sustainability for both the Centre and
the States.
10. The Commission may review the present scheme of
Calamity Relief Fund and may make appropriate recommendations
thereon."
ADDITIONAL TERMS OF REFERENCE FOR ELEVENTH FINANCE COMMISSION
In pursuance of the provisions of article 280 of the Constitution
read with sections 6 and 8 of the Finance Commission (Miscellaneous
Provisions) Act, 1951 (33 of 1951), the President hereby directs
that in the Order dated the 3rd July, 1998 published in the
Notification of the Government of India in the Ministry of
Finance (Department of Economic Affairs) No. S.O. 557(E),
dated the 3rd July,1998, in paragraph 4, the following shall
be added at the end, namely:-
"In particular, the Commission shall draw a monitorable
fiscal reforms programme aimed at reduction of revenue deficit
of the State and recommended the manner in which the grants
to States to cover the assessed deficit in their Non-Plan
Revenue account may be linked to progress in implementing
the programme".
|