Recommendations of the 12th Finance Commission
The 12th Finance Commission, chaired by Dr. C. Rangarajan, submitted its report for the period 2005-2010. Its primary objective was to recommend principles governing the distribution of tax revenues between the Union and the States, and among the States themselves. The commission’s recommendations significantly impacted fiscal federalism in India.
Key Recommendations:
- Tax Devolution: The Commission recommended that the States’ share in the net proceeds of shareable Central taxes should be 30.5%. This was a modest increase from the 29.5% recommended by the 11th Finance Commission, reflecting a cautious approach towards fiscal consolidation and responsibility at both the Union and State levels.
- Grant-in-Aid: Besides tax devolution, the Commission advocated for grants-in-aid to States to address specific needs. This included grants for local bodies, special category states, calamity relief, and grants to address non-plan revenue deficit. A significant focus was placed on improving the infrastructure and service delivery at the local government level.
- Fiscal Responsibility: The Commission emphasized fiscal discipline and recommended that both the Union and States enact and adhere to Fiscal Responsibility Legislation (FRL). It suggested measures to reduce revenue deficits and public debt. Incentives were linked to adherence to FRL targets, encouraging States to manage their finances prudently.
- Debt Relief: Recognizing the burden of debt on States, the Commission recommended a debt consolidation and waiver scheme. This scheme involved consolidating Central loans to States and rescheduling them over a 20-year period with a lower interest rate. States that adhered to FRL targets were eligible for debt waivers, incentivizing fiscal prudence.
- Local Body Grants: A substantial portion of the grants was earmarked for local bodies (Panchayats and Municipalities). These grants were intended to improve the quality of services provided by local governments, such as water supply, sanitation, and primary education. The Commission stressed the importance of empowering local bodies and strengthening their financial autonomy.
- Calamity Relief: The Commission recommended a revised scheme for financing calamity relief. It proposed the creation of a National Calamity Contingency Fund (NCCF) and State Disaster Response Funds (SDRF) to provide timely assistance to affected regions.
- Performance-Based Incentives: The Commission introduced the concept of performance-based incentives. States were encouraged to improve their fiscal management, infrastructure development, and service delivery. Grants were linked to the achievement of specific targets in these areas, promoting efficiency and effectiveness.
Impact:
The 12th Finance Commission’s recommendations significantly influenced fiscal management in India. The increased tax devolution provided States with more resources, while the debt relief scheme eased their financial burden. The emphasis on fiscal responsibility and performance-based incentives encouraged States to improve their financial management and service delivery. The grants to local bodies helped strengthen local governance and improve the quality of life at the grassroots level. Overall, the Commission’s report played a crucial role in promoting fiscal stability and inclusive growth in India.
600×400 iastoppers upsc ias exam preparation ias strategy syllabus from www.iastoppers.com 
768×994 recommendations thirteenth finance commission from studylib.net 
806×517 burning issue finance commission recommendations part from www.civilsdaily.com 
2560×1440 finance commission article finance commission members from pwonlyias.com 
4500×4321 fifteenth finance commission interim report recommendations upsc from www.iasexpress.net 
1200×1553 finance commission recommendations reddy ffc from www.studocu.com 
452×640 state finance commission summary recommendations from www.yumpu.com 
900×600 recommendations finance commission india from edukemy.com 
900×600 discuss recommendations finance commission from edukemy.com 
602×851 finance commission submits report check recommendations from www.zeebiz.com 
1200×675 sixteenth finance commission constitutes member advisory council from currentaffairs.adda247.com 
1600×840 chairman finance commission from vishalversatile.com 
1024×434 cabinet approves finance commissions terms upsc from www.iasgyan.in 
850×1152 challenges fifteenth finance commission from www.researchgate.net 
1200×774 cabinet approves terms reference finance commission from thearabianpost.com 
756×404 terms reference tor sixteenth finance commission fc from www.ensureias.com 
1600×840 finance commission invites applications economic adviser post from www.taxscan.in 
1000×854 terms reference tor sixteenth finance commission from www.insightsonindia.com 
621×414 finance commission eye storm from www.livemint.com 
630×364 finance commission term extended yeargs polity empower from empowerias.com 
850×913 allocation funds finance commission table from www.researchgate.net 
1600×900 union budget takes note key finance commission suggestions from www.hindustantimes.com 
1235×1442 editorial analysis charting path sixteenth finance from www.insightsonindia.com )
826×465 govt appoints full time part time member finance from www.business-standard.com 
778×655 indias silent fiscal crisis fragile federalism finance from thewire.in 
700×700 exclusive finance commission recommend doubling public from www.moneycontrol.com 
1920×1080 guidelines brought finance ministry from www.rajstartup.com 
320×171 personal finance singaporepdf from www.slideshare.net 
1920×1080 guidelines issued finance ministry raj startup from www.rajstartup.com 
764×764 department finance from mgt.sjp.ac.lk 
1024×768 aligning strategy finance performance management challenges from www.slideserve.com 
