NK Singh will head Finance Commission

The central government appointed former expenditure and revenue secretary NK Singh as head of the 15th Finance Commission and former secretary of department of economic affairs Shaktikanta Das as India's G20 Sherpa till December 2018 on Monday. Normally, the deputy chairperson of erstwhile Planning Commission represents the country at the G20 Summit. Das has also been appointed as a member of the Finance Commission to work with Singh.

In a notification issued on Monday, the government said Singh, as head of the Finance Commission, will decide on the devolution of tax revenue between the Centre and the state governments. Other members will include Adjunct Professor at Georgetown University Anoop Singh, Non-Executive Chairman at Bandhan Bank Ashok Lahiri and Niti Aayog Member Ramesh Chand. Arvind Mehta will be the Secretary to the commission. The Commission is set up every five years and reviews finances, deficit and debt levels of the Centre and the states.

The panel also suggests devolution of taxes between the states and the Centre.

The government has already set aside an amount of Rs 10 crore in the current financial year for the constitution of the Finance Commission. The 14th Finance Commission was set up on January 2, 2013. Its recommendations covered the period from April 1, 2015 to March 31, 2020. "Normally, it takes two years for the Finance Commission to give its recommendations," Finance Minister Arun Jaitley said after the Union Cabinet approved setting of the Commission on November 22. He said the 15th Finance Commission recommendation will be applicable by 2020.

NK Singh was also a member of the Planning Commission as well as Secretary to the then Prime Minister Atal Bihari Vajpayee. He was also elected to the Rajya Sabha as the member of JD(U) in 2008, but he quit the party and joined the BJP in the run up to 2014 Lok Sabha elections when JD(U) decided to contest separately.

Earlier, he headed a committee to suggest a future fiscal roadmap by reviewing the fiscal discipline rules. He had recommended enacting a new Debt and Fiscal Responsibility Act after repealing the existing Fiscal Responsibility and Budget Management (FRBM) Act, and creating a fiscal council.

As per Article 280(1) of the Constitution, the government is obligated to form the Finance Commission after every five years, or at an earlier time as the President deems necessary. The Commission is required to make recommendations on distribution of the net proceeds of taxes between the Centre and the states. The recommendations by the newly formed 15th Finance Commission are supposed to be in place before April 1, 2020.

The 15th Finance Commission will also have to factor in the impact of the Goods and Services Tax (GST), which was rolled out earlier this year on July 1, on the resources of the central as well state governments when it furnishes its recommendations for allocating tax resources.