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15th Finance Commission’s Final Report

15th Finance Commission’s Final Report:

The Fifteenth Finance Commission of India have submitted its final report for a five-year duration. The report has been submitted with the objective of transforming the financial governance of India’s municipalities.

  • The interim report for Financial Year 2020-21 was tabled in Parliament along with Budget 2020-21.
  • The final report for Financial Year 2021-22 to Financial Year 2025-26 was tabled along with the Budget 2021-22.

Key Highlights of the report:

  • The 15th FC has significantly raised its bar on the financial governance of India’s municipalities in the interim report.
  • The final report also maintains these four specific agendas.

The four agendas include:

  • The 15th FC has tried to increase the overall outlay for municipalities. It has set 29,000 crores for FY 2020-21.
  • It has also indicated the intent to raise the share of municipalities in the total grants of local bodies from 30 percent to 40 percent.
  • Two entry conditions have been set for any municipality in India to receive FC grants namely, the publication of audited annual accounts that would help in boosting the financial accountability and notification of floor rates for the property tax that would help in raising the revenue enhancement.
  • The 15th finance commission has adopted the approach of distinguishing between million-plus urban agglomerations and other cities.
  • It also recommends a common digital platform for municipal accounts, a consolidated view of municipal finances and the sectoral outlays at the state level apart from the digital footprint of individual transactions at the source.
  • These four aspects of the interim report highlight that the 15th finance commission aims to bring the logical culmination of municipal finance reforms.
  • However, the foundation for bringing about these reforms was also laid by the thirteenth and fourteenth finance commission.