January 3, 2017

14th Finance Commission Recommendations- Civil Services

The 14th Finance Commission (FFC) was constituted by the orders of President on 2 January 2013 in accordance to the Article 280 of the Constitution of India. The commission submitted its report with recommendations to the President Pranab Mukherjee on 15 December 2014.The commission was formed to suggest recommendations for the period from 1 April 2015 to 31 March 2020.

Some Major Recommendations of 14th FC - Exam View Point:
1.The share of states in the net proceeds of the shareable Central taxes should be 42%.This is 10%points higher than the recommendation of 13th Finance Commission.
2.Revenue deficit to be progressively reduced and eliminated.
3.Fiscal deficit to be reduced to 3% of the GDP by 2017–18.
14th Finance Commission Recommendations for UPSC Mains, APPSC TSPSC Group1 Group 2 Exams
4.A target of 62% of GDP for the combined debt of centre and states.
5.The Medium Term Fiscal Plan(MTFP)should be reformed and made the statement of commitment rather than a statement of intent.
6.FRBM Act need to be amended to mention the nature of shocks which shall require targets relaxation.
7.Both centre and states should conclude 'Grand Bargain' to implement the model Goods and Services Act(GST).
8.Initiatives to reduce the number of Central Sponsored Schemes(CSS)and to restore the predominance of formula based plan grants.
9.States need to address the problem of losses in the power sector in time bound manner.

10. TAX DEVOLUTION TO BE BASED ON AREA, POPULATION, DEMOGRAPHY, INCOME DISTANCE & FOREST COVER- Highest weight of 50 per cent is given to distance from the highest per capita income district, followed by population (1971 census) at 17.5 per cent, demography (2011 census) at 10 per cent, area at 15 per cent and forest cover at 7.5 per cent

11. CENTRE'S FISCAL AND REVENUE DEFICITS -Fiscal deficit should come down to 3.6 per cent of GDP in 2015-16 from projected 4.1 per cent in 2014-15 and then 3 per cent in following year and kept at that for three more years. Not different from existing roadmap, though the present time frame ends in 2016-17. Wants revenue deficit to come down from 2.9 per cent in FY15 to 2.56 per cent in FY16 and then progressively reduce to 0.93 per cent by 2019-20