KEY POINTS

DEVOLUTION TO STATES REDUCED BY 1 PERCENTAGE POINT

The Commission estimated that the erstwhile states of Jammu & Kashmir and Ladakh accounted for about 0.85 per cent of the divisible pool. It noted that there is a strong need to enhance this to 1 per cent, keeping in mind security concerns and special needs. Therefore, the aggregate share of states is to be reduced to 41 per cent of the divisible pool

REPORT RECOMMENDS ~90,000-CR GRANT TO LOCAL BODIES

The 15th FC departed from previous commissions by increasing focus on local bodies. It recommended an amount of ~90,000 crore as grants to them for FY21, which amounts to 4.3 per cent of the total divisible pool. It also identified the need to increase inter se shares of local body grants for urban areas

NEED TRANSPARENT REPORTING OF DEFICIT AND DEBT

Outstanding extra-budgetary liabilities, such as financing expenditures through off-budget borrowings and through parastatal entities, need to be clearly identified and eliminated in a time-bound manner, with transparent reporting of deficit and debt as provided in the Fiscal Responsibility and Budget Management Act, says the report

COMMITTEE FOR AN OVERARCHING LEGAL FISCAL FRAMEWORK

The Commission recommended constituting a committee for an overarching legal fiscal framework that would mirror the revised Fiscal Responsibility and Budget Management Act, define roles and responsibilities of stakeholders, as well as the budgeting, accounting and audit standards to be followed at all levels of government

GOVT ASKED TO REVIEW CENTRAL SCHEMES

The Commission noted the proliferation of centrallysponsored schemes and central sector schemes. It observed the tendency of the Centre to continue with them, without analysing their outcomes. It urged the Centre to review such schemes and rationalise the list to focus on certain key sectors and interventions with nationwide externalities

SEPARATE MECHANISM FOR DEFENCE & INTERNAL SECURITY

The Commission acknowledged the criticality of the additional terms of reference asking it to examine whether a separate mechanism for funding defence and internal security is to be set up. There is merit in ensuring a predictable and stable flow of funds for defence and internal security and this will receive appropriate consideration in our final report, it said