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 TERMS OF REFERENCE
OF THE TENTH FINANCE COMMISSION
Paras 3-9 of the Presidential Order dated 15th June, 1992
containing the terms of reference of the Tenth Finance Commission
are reproduced below:-
"3. The Commission shall make recommendations relating 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.
4. In making its recommendations, the Commission shall have
regard, among other considerations, to:-
(i) the objective of not only balancing the receipts and
expenditure on revenue account of both the States and the
Central Government, but also generating surplus for capital
investment and reducing fiscal deficit;
(ii) 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 liabilities;
(iii) the maintenance and upkeep of capital assets and
maintenance expenditure on plan schemes to be completed
by 31st March, 1995 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;
(iv) the requirements of States for modernisation of administration,
e.g. computerisation of land records and providing faster
channels of communication upto and above district level,
and for upgrading the standards in non-developmental sectors
and services, and the manner in which such expenditure can
be monitored;
(v) the revenue resources of the States for the five years
commencing on 1st April, 1995, on the basis of the levels
of taxation likely to be reached in 1993-94, targets set
for additional resource mobilisation for the plan and the
potential for raising additional taxes;
(vi) the requirements of the States for meeting the non-Plan
revenue expenditure also keeping in view the potential for
raising additional taxes;
(vii) the tax efforts made by the States;
(viii) the need for ensuring reasonable returns on investment
by the States in irrigation projects, power projects, state
transport undertakings, departmental commercial undertakings,
public sector enterprises, etc; and
(ix) the scope for better fiscal management consistent
with efficiency and economy in expenditure.
5. The Commission may suggest changes, if any, to be made
in the principles governing the distribution of:-
(a) the net proceeds in any financial year of the additional
excise duties leviable under the Additional Duties of Excise
(Goods of Special Importance) Act, 1957, in replacement
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 Act,
1957.
6. 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.
7. The Commission may review the present scheme of Calamity
Relief Fund and may make appropriate recommendations thereon.
8. The Commission may make an assessment of the debt position
of the State as on 31st March, 1994, and suggest such corrective
measures as are deemed necessary also keeping in view the
financial requirements of the Centre."
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